Public Bill Committee

[Ann Winterton in the Chair]

Schedule 3

Sustainable Drainage

Amendment proposed (this day): 151, in schedule 3, page 52, leave out lines 19 and 20 and insert
(1) The Minister shall by order provide for the enforcement of
(a) the requirement for approval in paragraph 7(1); and
(b) the duty to maintain in paragraph 21..(Miss McIntosh.)

Question again proposed, That the amendment be made.

Ann Winterton: I remind the Committee that with this we are discussing the following: amendment 155, in schedule 3, page 54, line 36, leave out becomes responsible for maintaining and insert
shall be under a duty to maintain.
New clause 13Ownership and maintenance of sustainable urban drainage systems
It shall be stated which body has to be responsible for
(a) the ownership, and
(b) maintenance of sustainable urban drainage systems..
New clause 21Transfer of sustainable urban drainage systems
The Secretary of State may make provision for the transfer of Sustainable Urban Drainage Systems to water and sewerage companies..

Huw Irranca-Davies: I welcome you to the Chair, Lady Winterton. I look forward to serving under your stewardship on this final and very important sitting of this well supported Bill.
I was making my concluding remarks, and I simply wanted to say that the Bill itself provides 100 per cent. clarity on the arrangements for approval and adoption of sustainable drainage systems in new developmentsones that have not yet been built. Unitary and county local authorities will be SuDS approving bodies, and they will be responsible for both functions. Those with responsibility for adopting and maintaining SuDS should also lead on approving their design and construction. That will mean that robust, well designed SuDS that can be efficiently and effectively maintained are built.
The SAB, which is also responsible for surface water and is lead local flood authority, will consider the wider impacts of the development. County and unitary authorities will be responsible for approving drainage systems in new developments. Where planning permission is required, the developer can apply via the planning authority to streamline the process, but the decision on drainage lies with the SAB and it will be guided by the national standards, which will set out connection to the sewer as a last resort.
Water and sewerage companies, as well as the Environment Agency, are statutory consultees to the approving process. Let me be clear: the process holds significant weight. The SAB is liable for approving any SuDS application. As a result, it will be subject to judicial review proceedings should it fail to discharge its duties. It is clearly strongly in the interests of the approving body to consult effectively and listen to the advice of the water company regarding sewer capacity. However, it must equally be emphasised that water and sewerage companies are under a general duty to provide, maintain and extend the public sewerage system in their areas.
County and unitary authorities are also responsible for adopting and maintaining new SuDS that serve more than one property. Where those SuDS are in roads, the Highways Authority will maintain them. SuDS are also located at county and unitary level. Developers welcome that as it sets out clear arrangements for maintenance and provides an incentive for SuDS to be built, which is what we all want to see.
Let me quickly pick up on the question asked by my hon. Friend the Member for Selby. In Scotland, the water company is state-owned, but here they are private. In Scotland the arrangements are more fragmented, with local authorities adopting SuDS in roads, and Scottish Water adopting other SuDS and so on. This measure is much clearer.
Returning to the Bill, arrangements have also been made to protect private SuDS by way of designation under schedule 1, and enforcement arrangements are provided for in schedule 3. Under the Bill, the SAB can also adopt existing SuDS voluntarily. Such arrangements for approval and adoption are very clear; they cover all types of new SuDS and are all already set out in the Bill.
Let me add some further clarity on adoption functions in order to address the view of somebut not allwater companies that they should adopt and maintain SuDS, and to address concerns about who is accountable. If flooding occurs because a SuDS that the local authority has adopted has not been maintained properly, the local authority will be responsible. It will have failed in its duty, andI hope this does not happenit could be sued if damages are caused through negligence. There is nothing in the Bill to prevent unitary and county local authorities, in their role as SABs, from transferring their adoption functions to water and sewerage companies by agreement should they choose to do so, and that may happen. The SAB would retain responsibility and liability for the SuDS, and that is right. However, arrangements for funding in that respect would need to be agreed.
The Bill also makes provision for the Minister to appoint, by order, a body other than the unitary or county council to be the SAB under sub-paragraphs (3) to (5) of paragraph 6 of schedule 3. We have spoken to the water industry and both it and we are content that the spirit of what it wants can be delivered via the guidance on the process of seeking and maintaining approval, which is the subject of Government amendment 159, accepted this morning. The same applies to the following group of amendments. We are content that the spirit of what is wanted can be delivered via the guidance. We will speak to the industry between now and consideration on Report, so that if there are any residual issues, amendments can be tabled on Report. The water industry will be involved in the development of the guidance. As statutory consultees to the SuDS approval process set out in the Bill, the SAB must take notice of the advice of water companies. I will clarify in guidance exactly what that means.
With those reassurances and clarifications, I hope that the hon. Member for Vale of York will consider withdrawing the amendment.

Anne McIntosh: I warmly welcome you to the Chair, Lady Winterton. It is a great pleasure to serve under your chairmanship. As the Minister said, this is the last lap of the Committee stage, so it is a particularly important sitting.
Unfortunately, the Minister has not satisfied us on many aspects. Immediately before lunch, he referred to his letter of 19 January relating to SuDS and the automatic right to connect. In particular, we have concerns over new developments. On the second page, the letter states that it is already open to planning authorities to impose a planning condition deferring development or, ultimately, to refuse consent for a new development.
Water and sewerage companies should be recognised as statutory consultees on the same basis as the Environment Agency. They should be able to set conditions to avoid the outfall from SuDS into the sewerage system causing spillage, as was described by the hon. Member for City of Durham and other hon. Members. I want the companies to be able to say that the capacity required for a new development requires changes to the infrastructure, and for those changes to take place as part of the planning conditions. Everybody I have spoken to informs me that under the current provisions, what the Minister is assuring us will happen will not happen.

Huw Irranca-Davies: I want simply to reiterate my commitment that, subject to discussions with the water industry next Tuesday, I will come back and give time should the hon. Lady or other hon. Members think amendments are needed subsequently. The water industry should be able to indicate whether it is reassured or not.

Anne McIntosh: I am most grateful. As we learned this morning, the problem is that the Governments track record on issuing guidance is woeful. We are still waiting for the guidance to be issued on the adoption of private drains and sewers. We are told that that is on target to be brought in by 2011.

Laurence Robertson: On a point of order, Lady Winterton. Can we confirm whether it would be in order to table on Report amendments similar to those we are discussing?

Ann Winterton: I reassure the hon. Gentleman that that would be entirely in order. Of course, I cannot give an undertaking about the selection of such amendments.

Anne McIntosh: I am most grateful.
The Ministers letter and remarks show that we are still in a bit of a muddle on this matter, and we seek clarification in the Bill. We do not want water and sewerage companies just to be consulted on guidance, but for the guidance to stipulate that they will set conditions. Can the Minister give us a commitment in Committee that water and sewerage companies will be in a position to set conditions, so that they can advise the planning bodythe SAB? That goes to the heart of the Bill. I believe that the developer and the owners of the new houses on a major new development should pay. Any costs that arise from works to the infrastructure owned by the water and sewerage companiesbecause of the potential for surface water relating to the major new development to come into the sewerage systemshould under no circumstances fall to existing customers. Is the Minister prepared to put that commitment on record? He shakes his head, so I am afraid that he does not satisfy us.
Furthermore, the Minister just said that the arrangements for funding the SuDS approval body have yet to be agreed. He has gained a great deal of celebrity and popularity during the Committees proceedings, and I hope that he is not now playing us for fools. Why should we let this part of the Bill go without an assurance about what the funding will be and who will provide it? He knows that the so-called SuDS approving bodies, namely local authorities, have made representations at every opportunity, saying that they do not have the necessary funds.

Huw Irranca-Davies: I say only that I have made my commitment clear and outlined what we intend to do about the whole range of funding burdens. Will the hon. Lady make it clear that, if she were in my post after a general election, she would honour those commitments? With those assurances, local authorities, water companies and others would have to have faith in Ministers to fulfil the commitments.

Anne McIntosh: To which commitment is the Minister specifically referring?

Huw Irranca-Davies: We have committed to considering the whole range of burdensSuDS, sewers, skills, training, capacity and so onand to sitting down formally with the Local Government Association and others to decide the way forward.

Anne McIntosh: My hon. Friends will hear me make this commitment: my understanding is that we are totally committed to doing that. We forced the Minister to this point by saying that if he were not prepared to introduce the Bill, we would introduce it as an emergency measure if our positions changed. We are seeking his assurance now so that water company customers know that they will not pay, that there will not be an extra charge on the local council tax and that the new developers will pick up the bill.
Another point of difference is that we believe that the SuDS approval body is not best placed to maintain SuDS once they have been approved.
I do not wish to detain the Committee further. I simply wish to press the amendment to a vote.

Question put, That the amendment be made.

The Committee divided: Ayes 7, Noes 9.

Question accordingly negatived.

Amendment made: 159, in schedule 3, page 53, line 3, at end insert

Guidance
14A The Minister may issue guidance about the process of seeking and obtaining approval; and approving bodies must have regard to the guidance..(Huw Irranca-Davies.)

Anne McIntosh: I beg to move amendment 152, in schedule 3, page 53, line 19, leave out Where and insert Subject to section 106AA below, where.

Ann Winterton: With this it will be convenient to discuss the following: amendment 153, in schedule 3, page 53, line 24, at end insert
106AA Communication with sustainable drainage systems
(1) This section applies to drainage systems the construction of which requires approval under Schedule 3 to the Flood and Water Management Act 2010 (sustainable drainage).
(2) Terms and expressions used in Schedule 3 to the Flood and Water Management Act 2010 shall have the same meanings in this section.
(3) The communication of a drainage system with a public sewer or other works owned by or vested in a sewerage undertaker may not be approved or effected by an approving body or other person except in accordance with this section.
(4) An approving body or other person wishing to approve or effect the communication of a drainage system with a public sewer or other works of a sewerage undertaker shall give notice of its or his proposals to the sewerage undertaker.
(5) At any time within 21 days after a sewerage undertaker receives a notice under subsection (4) above, the undertaker may by notice to the person who gave the notice refuse permission for the communication to be made, or grant permission for the communication subject to such conditions as it thinks fit, subject to taking into account the considerations set out in subsection (6) below.
(6) The considerations which the sewerage undertaker is to take into account include whether the communication of the drainage system with the public sewer or other works of the sewerage undertaker may contribute towards one or more of the following
(a) the overloading of the public sewer or other works of the sewerage undertaker, and the consequential overflowing of its or their contents and the flooding of adjoining property or land;
(b) the overloading of any sewage disposal works, so adversely affecting such works capacity to treat or dispose of sewage in compliance with any statutory requirement or consent applicable to it;
(c) increased flows in and resulting overflows and discharges from combined foul and surface water sewers, which may have adverse effects on the aquatic environment, or which may cause the undertaker to be in breach of a statutory requirement or consent applicable to the discharge;
(d) the pollution of inland waters, the flooding of property or land, or the impairment of river or drainage systems, whether or not arising from any of the matters described in paragraphs (a) to (c) above.
(7) Any question arising under subsections (4) to (6) above between a sewerage undertaker and any other person as to the reasonableness of the undertakers refusal to permit a communication to be made, or the reasonableness of the conditions on which the undertaker is prepared to permit a communication to be made may, on the applications of that person, be determined in accordance with regulations made under paragraph 24 of Schedule 3 to the Flood and Water Management Act 2010.
(8) In this section, inland waters has the meaning given by the Water Resources Act 1991..
Amendment 154, in schedule 3, page 53, line 25, leave out After and insert Subject to section 106AA above, after.

Anne McIntosh: This group follows on from the previous one so we do not need to debate it in quite such depth. It is entirely complementary to the previous group.
As the Bill is drafted, the SuDS-approving body, which the Minister explained will be a county council or unitary authority, has the right to allow the connection of a SuDS to the public sewerage system after consulting the sewerage undertaker. This matter is about the rights of a third party. Could the Minister take this opportunity to explain what is meant by consultation? Does the SuDS-approving body have a duty just to consult, or will it be bound to take notice of the water or sewerage undertakers opinion? Will the Minister define consultation? What will be the nature of the consultation, what response will there be to it and will any legal obligations flow from it?
The purpose of this group of amendments is to ensure that a SuDS cannot be connected to the public sewerage system without an application being made to the sewerage undertaker. That goes to the heart of our discussions about ensuring that we meet the Pitt recommendation that there ought be an end to the automatic right to connect, and that it cannot just be assumed that the infrastructure will take the weight of the water coming into the sewerage system. To put this in a positive way, we want a specific connection, with a specific application being made to the sewerage undertaker.
Under the amendments, the sewerage undertaker would, within 21 days, refuse or grant permission for the connection, subject to conditions. That is crucial. There would be a right of appeal, as prescribed by Ministers. The Minister will be delighted that we have recognised his role. He has expressed disappointment on previous occasions that we have not.
In making its decision, the sewerage undertaker would have to take account of whether a proposed connection could cause sewer overload, which in turn could cause the flooding of property or pollution downstream. That point relates to many discussions we have had, not just on the previous group of amendments. Often, people who have just moved in to recent developments face flooding or suffer pollution because of sewage coming from major new developments built nearby.
Unamended, the Bill will give the SuDS-approving body the authority to approve a connection, but no accountability for the consequences of that decision. If the connection causes flooding and pollution, the sewerage undertaker and its customers will have to meet the cost of repairing the sewer. It should fall to the occupants of the major new development, whether it is business property or housing, to pay the charge for the increased capacity that is needed for the development. With major new developments, we are not talking about one or two odd houses, but 20, 50 or 200 houses.
I think the Minister might respond by arguing that the public sewerage system will be protected by the planning system and the prescribed national standards for SuDS, which are required to be administered by local authoritiesI am beginning to read his mind. However, recent Committee discussions and past experience indicate that sewerage undertakers and water companies, and their customers, cannot always rely on local authorities to protect their interests.
I grant that these are substantial amendments, which insist on a change to the existing section 106 agreementsmy hon. Friend the Member for Upminster alerted us to the fact we have to make that change this morning. The purpose of amendments 152 and 153 is to ensure that the consultation will take place. Approval needs to be sought, consents need to be given and, where appropriate, conditions will be made. I have no hesitation whatsoever in recommending this small group of significant amendments to the Committee for approval.

Huw Irranca-Davies: I am pleased to respond. I think we are trying to do the same thing, but a substantive point of difference seems to be emerging in the way we should do it.
The amendments would enable the sewerage undertaker to refuse drainage from some developments and highways. That could place barriers in the way of development, including housing, because it would give water companiesalthough I have acknowledged that they have a privotal role to play in this, they are nevertheless private companies with a commercial interesta disproportionately powerful role in the planning and development process. Furthermore, it would allow them to reject applications for connection on the basis of sewer capacity, rather than continuing with investment in infrastructure, which is part of the normal dialogue with the regulator. The amendment would enable those companies to protect their own financial managingsI am not saying that they wouldrather than provide a public drainage service fit for households and businesses. That is made explicit by the conditions, which are included in the amendment, whereby the water and sewerage company could reject the application.
I recognise that the amendment provides for an appeals mechanism, but the point remains that it could lead to delays in the planning system, and to further burdens for developers and public bodies. As stated during last weeks discussions on clause 11, under paragraph 15 to schedule 3, connections to the sewers are conditional on the drainage systems being approvedthe hon. Lady was reading my mindby the SuDS-approving body as meeting the national standards for SuDS. I have circulated some details to hon. Members about how that process would work.
A developer would therefore be required to look for alternatives to connection or reduce the flow of the volume of surface water to the sewer. That is directly in keeping with Sir Michael Pitts review recommendations. However, amendments 152, 153 and 154 could mean that even if the drainage were constructed according to the approved plan and national standards, the water and sewerage company would be able to reject a connection to the sewer. After going through the hierarchy, the process and satisfying the conditions, it could then say, Ah, but were not happy with it. Sorry.
The Bill places the role of the SuDS-approving body not with water and sewerage companies, but with county and unitary local authorities. Local authorities are more responsive to local feedback and are democratically accountable for their decisions. Responsibility for SuDS fits well with the local authoritys wider role, about which I have spoken before.
I understand the need to take account of the impact of new developments on sewerage capacityindeed, that is exactly why we have set out the proposals for sustainable drainage in the Bill. However, we must consider how we deliver the measure in practical terms. The Home Builders Federation set out its concerns about the amendments on the right to connect to the sewer and the role of commercial water and sewerage companies directly in the planning and decision-making processes. It has urged me to consider the impact on the house building sector, both in terms of the cost to developers and the supply of housing, which is a concern for all of us. That is exactly what we have done in the balance of the Bill.
In deciding on a permit, the proposed amendment would allow the undertaker to consider whether a connection would contribute to the problem of overloading the public sewers. However, the current system already provides for improvements to be made to the public sewer network to deal with capacity issues. Under section 94 of the Water Industry Act 1991, water and sewerage companies are required to provide, improve and extend the system of public sewers. Moreover, when a planning authority recognises a need for the public sewer system to be extended before a development can go ahead, the planning authority can seek to impose a condition on planning consent to defer the development or to seek a planning obligation from the developer. Such an obligation would require the developer to provide a contribution to the financing of the sewer network extension, so that the network covered the new development. Again, that provides for additional capacity.
However, the Bill provides for water and sewerage companies to be statutory consultees to the SuDS-approving body where a connection to the sewer is proposed. Water and sewerage companies are well placed to feed in their local knowledge and expertise about the capacity within their sewers. They can also feed into plans for future provision, and the issue of hot spots. The role of a statutory consultee will give them the opportunity to consider the drainage applications and the impact on the sewerage network.
I was asked why the approving body would not simply ignore the advice. Paragraph 11(3)(a) requires that the approving body mustnot mayconsult
any sewerage undertaker with whose public sewer the drainage system is proposed to communicate.
If it fails to consult, it would be in breach of the provisions. In terms of how the consultation will work, it is well established that the consultation must be carried out properly to satisfy the common law principles of procedural fairness, so consultation must be taken while the authoritys decision about whether to approve is at the formative stagenot at the end. The authority must ensure that the undertaker has been given sufficient information and adequate time to respond. The authority must conscientiously take the responses into account and if the authority goes against the undertakers advice, it will be expected to provide reasons and transparency. Ultimately, if the authority makes a decision without consulting properly, the undertaker is very likely to have it overturned on judicial review, because the authority has not carried out its duties.
With that clarification of what is in the Bill and why this is necessary[Interruption.] I suspect that we may have a point of substance, so I will give way.

Andrew Turner: I wonder whether the Minister would go over the point once again, because I am slightly confused. Is he saying that if someone brings forward an application and it is felt locally that there is a need for extensions to the sewers and so on, the matter would be determined by the planning committee? Is it possible for the planning committee to go ahead and give its permission without requiring those sewers to be input even though they are necessary?

Huw Irranca-Davies: Let me read into the record once again for complete accuracy. If a democratically elected planning authority recognises the need for a public sewer to be extended, and it has concerns about it, before development can go ahead, the planning authority can seek to impose a condition on planning consent either to defer the development or even to seek a planning obligation on the developer that would say to them, You will have to contribute to the costs of extending the sewerage network.
After those clarifications, I will reiterate an offer that I made this morning. On clauses to which amendments have not been tabled, I would be more than happy to write to hon. Members about any concerns that they may have on stand part debates. That would help us to get through todays business.

Anne McIntosh: My hon. Friend the Member for Isle of Wight has identified an issue of concern. I am not sure whether the Ministers answer has satisfied us. He said that the authority would be consulted, but he has not said that there is a duty.

Huw Irranca-Davies: Just to clarify, there is a duty. The authority must be consulted; it is not an optional extra.

Anne McIntosh: I do not think that there is any dispute about the fact that the authority must be consulted, but we want to impress on the Minister that the consultation will be respected. I am not imagining in any way that this group of amendments is meant to stop major developments from happening. I do not think that the water companies are approaching it in that frame of mind. They are trying to prevent future flooding.
There is a point of difference here and we would like to press it, because again the Minister is asking us to take his word. We are saying that we need these amendments, especially amendment 152. I have read the Ministers letter to the Committee extremely carefully, and I found it very difficult to follow, particularly the diagram, because it is a very confusing and complicated area. We believe that it is only through our group of amendments, especially amendment 152, that we will give effect to the recommendation of the Pitt review to end the automatic right to connect.

Question put, That the amendment be made.

The Committee divided: Ayes 5, Noes 9.

Question accordingly negatived.

Huw Irranca-Davies: I beg to move amendment 69, in schedule 3, page 54, line 19, at beginning insert Sub-paragraphs (3A) and (3B) apply.

Ann Winterton: With this it will be convenient to discuss Government amendments 70 to 74, 78 and 161

Huw Irranca-Davies: I will try to speak to this batch of amendments as clearly and concisely as I can, so as not to detain the Committee. They are all sensible amendments. They relate to paragraphs 18 and 22 and aim to protect sustainable drainage systems within roads. Amendments 71 and 74 require the designation of roads with SuDS as
streets with special engineering difficulties
under section 63 of the New Roads and Street Works Act 1991. The result is that whoever is responsible for maintaining SuDS that are part of a road will be able to ensure that the drainage system is protected from damage arising from statutory work on the road, such as when utilities lay or repair cables in the road, and that any damage is repaired.
Amendment 71 requires that when the highways authority is the maintaining authority it must designate the street. Similarly, amendment 74 requires that the SuDS-approving body designates the street when it is responsible for maintaining the SuDS in that road. In most situations, works on a road do not present a problem because the local authority can protect the SuDS from damage through enforcement of property rights. However, statutory undertakers, such as utility companies, have the statutory right to place and maintain their apparatus in the highway, and that could put the SuDS at risk and result in their not functioning as designed. Designation of a road as
streets with special engineering difficulties
means the road cannot be broken up or interfered with until a plan of the works has been approved by the relevant authority.
Amendment 78 seeks to ensure that the requirements are signposted in the New Roads and Street Works Act 1991 by making an amendment to that Act. Amendments 69, 70 and 73 are what are referred to in draftsmanship terms as stylistic points. They are simply designed to reformat paragraphs 18 and 22(6) to reflect the new subparagraphs 18(3B) and 22(6)(i) proposed by amendments 71 and 74. They do not affect the purpose or effect of the Bill.
Amendment 72 would insert at the end of paragraph 18(4),
and a reference to a road includes a reference to part of a road.
The amendment seeks to avoid a situation in which a SuDS is not adopted and maintained by a highways authority because it does not affect the road in its entiretyfor example, where SuDS are on, in or under part of the road only. The amendment would provide clarity in that regard.
Government amendment 161 sets out a regulation-making power on the process and requirements for statutory undertakers to work with the SAB when carrying out the works on public land that affect, or might affect, SuDS. As with the previous amendments regarding SuDS and roads, the amendment extends the same protection for SuDS located in other public land from damage by a statutory undertaker.
SuDS on public land owned by a designating authority do not have the same protection, so damage to them could seriously hamper their ability to prevent surface water flooding of households and businesses. It could also lead to increased costs for the SAB, which would still be under its statutory duties to maintain the drainage system, but would find that inadvertently it has been damaged and is not functioning effectively through no fault of its own. The amendment would allow regulations to be made to require a statutory undertaker to notify the SAB that it is undertaking works and to either return the drainage system to its original state or build an alternative facility that would provide equivalent satisfactory drainage in accordance with national standards and with the agreement of the SAB.
The proposed regulations may also provide powers for the approving body to undertake work and recover its costs from the utility company, should the utility or other undertaker fail to restore the SuDS or if it has built a different drainage system that is not up to the standards or has not been approved.
I hope that amendment 69 is helpful. I look forward to moving subsequent amendments.

Amendment 69 agreed to.

Amendments made: 70, in schedule 3, page 54, line 20, after adopted), insert
(3A) .
Amendment 71, in schedule 3, page 54, line 24, at end insert
(3B) The maintaining authority must designate the road under section 63 of the New Roads and Street Works Act 1991 (streets with special engineering difficulties)..
Amendment 72, in schedule 3, page 54, line 27, at end insert
(and a reference to a road includes a reference to part of a road)..
Amendment 73, in schedule 3, page 55, line 34, leave out and.
Amendment 74, in schedule 3, page 55, line 37, at end insert , and
(i) designate under section 63 of the New Roads and Street Works Act 1991 (streets with special engineering difficulties) any adopted part of the drainage system that is a street within the meaning of section 48 of that Act..(Huw Irranca-Davies.)

Huw Irranca-Davies: I beg to move amendment 75, in schedule 3, page 56, line 38, at end insert
(2A) At the end of section 59 add
(7) Schedule 3 to the Flood and Water Management Act 2010 extends the power under subsection (1)(c) of this section to sustainable drainage systems as defined in regulations under that Schedule..

Ann Winterton: With this it will be convenient to discuss Government amendments 76 and 77.

Huw Irranca-Davies: Amendment 75 is another signposting amendment, signposting the effect of schedule 3, paragraph 25(2) in section 59(1)(c) of the Building Act 1984. Paragraph 25(2) provides for local authorities to act when non-maintenance or damage to a SuDS asset on one property is causing problems that are prejudicial to health or are a nuisance for those who own or occupy another property. The amendment would not change the purpose or effect of the provision in the Bill, but would signpost its effect under section 59(1)(c) of the 1984 Act. The amendment would harmonise both pieces of legislation and ensure that paragraph 25(2) operated effectively and fairly in practice.
Government amendments 76 and 77 are technical rather than stylistic amendments to the provision in paragraph 25(3), which in turn amends the 1984 Act. Under section 84(1) of that Act, local authorities can issue a notice requiring remedial work to a passageway or a courtyard that is not satisfactorily drained. The current drafting of that Act could unintentionally capture some sustainable drainage systems, where, for example, permeable paving is designed and used specifically to allow rainwater to drain to the ground rather than into a conventional piped drainage system. Our original amendment sought to close that loophole. However, in doing so we have created a technical issue in respect of section 84(1) of the 1984 Act, as it applies to buildings and their surroundings with conventional drainage. The amendment would rectify that by making two technical changes to the last line of paragraph 25(3), which ensure that where SuDS are built into a property or its surroundings the 1984 Act provision could not be used to require a drain to be put in its place in passageways, courts and yards, but can still apply as originally intended where traditional drainage is in place.

Amendment 75agreed to.

Amendments made: 76, in schedule 3, page 56, line 40, leave out omit and insert for.
Amendment 77, in schedule 3, page 56, line 40, at end insert
substitute (having regard both to the need to remove water from the court, yard or passage and also to the need to dispose of it satisfactorily in the course of or after its removal)..
Amendment 78, in schedule 3, page 56, line 40, at end insert

New Roads and Street Works Act 1991
26 At the end of section 63 of the New Roads and Street Works Act 1991 (streets with special engineering difficulties) insert
(5) In addition to criteria for designation prescribed under subsection (2)(a), Schedule 3 to the Flood and Water Management Act 2010 requires designation in certain circumstances (relating to sustainable drainage systems)..
Amendment 161, in schedule 3, page 56, line 40, at end insert

Works on public land
27 (1) The Minister may make regulations requiring a statutory undertaker to notify the approving body before commencing statutory works on public land where the works will or may affect the operation of a drainage system on that land.
(2) Public land means land owned or occupied by a designating authority for the purposes of Schedule 1.
(3) The regulations shall define
(a) statutory undertaker, and
(b) statutory works.
(4) The regulations may specify criteria for determining what works are to be treated as works that will or may affect the operation of a drainage system.
(5) The regulations may include provision about
(a) timing, and
(b) procedure.
(6) The regulations may
(a) specify consequences of failure to comply with a provision of the regulations;
(b) include provision requiring, or enabling an approving body to require, a statutory undertaker who is carrying out or has carried out works affecting a drainage system to carry out further work in relation to the system (which may include, in particular, a requirement to leave the system in a state approved by the approving body, having regard to national standards on sustainable drainage);
(c) give approving bodies default powers to undertake work and recover costs.
(7) The regulations may amend an enactment so as to introduce a cross-reference to the regulations..(Huw Irranca-Davies.)

Question put and agreed to.

Schedule 3, as amended, agreed to.

Clause 33 ordered to stand part of the Bill.

Schedule 4

Reservoirs

Anne McIntosh: I beg to move amendment 34, in schedule 4, page 57, line 15, leave out 10,000 and insert 15,000.

Ann Winterton: With this it will be convenient to discuss amendment 130, in schedule 4, page 71, line 27, at end add
43 One year after this Act coming into force the Minister shall carry out a review of the regulatory impact of this Schedule on undertakers..

Anne McIntosh: I am most grateful for the opportunity to set out our concerns, which are dealt with in amendment 34, regarding the provisions in schedule 4 on the safety of reservoirs and dams. I am sure that the Minister was in his place during Prime Ministers questions yesterday afternoon and that he will have heardor read, or his Department will have informed him aboutthe question asked by my hon. Friend the Member for Lichfield. A reservoir is leaking in his constituency, which raises the issues of maintenance and who pays if there is a specific leak.
The Select Committee mentioned in its report that smaller reservoirs should be examined to see whether they can be excluded from the system of inspections and procedures in an effort to reduce the costs. The regulations that deal with that cover those points. The National Farmers Union is, among others, particularly concerned about the potential impact of the proposals on small farm reservoirs. I am not suggesting that the NFU is asking to be exempt but, taking at face value what the Environment Agency is saying, we understand that the reason for the reservoir safety provisions is to reduce the threat to life and limb. I argue that the smaller10,000 cubic metres or underreservoirs do not pose a threat to life and limb.
Looking at the regulatory impact assessment, my understanding is that the costs associated with the provisions are, in fact, high, so the regulatory burden on those responsible for the smaller reservoirs would be great. The NFU has raised its concerns about the potential impact of the proposals in the Bill on small farm reservoirs, particularly regarding the increased bureaucracy associated with the Bill, which will lead to an increase in the registration and risk assessment work of farmers. I am sure that, as a matter of course, farmers would wish to investigate and would not want to have dams or reservoirs that were inherently unsafe. However, we believe that the provisions go too far and we want them to be reduced.
The NFU is also concerned about the proposal to make the failure to register a reservoir a criminal liability. Is the Minister prepared to concede that point? As he is aware, there are a number of reservoirs whose location and ownership is unclear. There is a concern that a previously unknown reservoir might be discovered and a criminal liability might attach to a farm or a small business.
The NFU has asked for there to be safeguards to ensure that the Bill does not become an enabling piece of legislation to be used at a future date to put additional costs and bureaucracy on to the farming sector. The Environment Agency supports the introduction of a risk-based approach to reservoir safety control, with more rigorous measures applying to reservoirs if failure would pose a risk to life. I simply argue that the amendment addresses that point by increasing capacity to 15,000 cubic metres.
The Association of Drainage Authorities states that the Bill makes a change to reservoir safety and checks to include all reservoirs of more than 10,000 cubic metres, instead of 25,000 cubic metres. Will the Minister explain the reason for the change? The Bill would give regard only to those that may have potential flood risk problems, and that would exclude quite a few from the regulations.
The association also raises the technical debate about rivers whose embankments are above ground. If they flooded, would they be treated in the same way as reservoirs that leaked or flooded? For clarification, it would welcome the reservoir clause being taken out of the Bill and put into a wider Bill that would become unifying legislation covering all major water issues. I am sympathetic to that view, but we have not concluded our thinking. We may want to remove the provision from the Bill on Report, but I welcome this opportunity to debate the matter.
Thames Water has said that it is important that communities next to reservoirs feel safe, and its position will depend on exactly how the changes under the Bill are made. The Country Land and Business Association is pleased with the introduction of a risk-based approach, but it is concerned about the 10,000 cubic metre threshold and the requirement to register. That will require several thousand low-risk reservoirs to sit on a register, because the threshold is too low. We are sympathetic to its view, and we want to know the reason for that threshold. The Minister may say that the limit was selected because incidents have been recorded of the public being at risk from a reservoir below the current threshold of 25,000 cubic metres. I hope that we have addressed that by suggesting an interim capacity of 15,000 cubic metres.
The CLA suggests that the Government have not given a strong enough reason to justify the regulations potential impact on businesses such as farmers and landowners who depend on reservoirs to do their work. The Government may feel obliged to adopt a risk-averse approach, and the CLA suggests a review of the impact of the threshold in, perhaps, a year. Is the Minister minded to agree to such a review?
The safety and maintenance of reservoirs is an important aspect of flood defence, and we should ensure that we are protected, but that should not be done in a way that adds administrative burdens and costs to farmers, landowners and small businesses. We have concerns, which we have addressed in the amendment. We believe that the Bills aims can be reached more efficiently and effectively, and impose fewer regulatory burdens, and it may be best to accept the amendment, or to remove the provision from the schedule.
The Minister will be aware that the Committee has received representations from the English Golf Union and, perhaps more importantly for him, the Golf Union of Wales.

Huw Irranca-Davies: What?

Anne McIntosh: I hope that the Minister has seen the representations about clause 33 and schedule 4. The organisations state that that the proposal to lower the above-ground volume, which is covered by the Reservoirs Act 1975, from the current threshold causes them real concern, and that the lowering of the qualifying volume will have a negative, unintended consequence. In recent years, wherever possible, golf clubs have worked towards responsible storage of excess winter water. I declare an interest; there are many golf courses in my constituency. The organisations believe that they are being unfairly caught by the memorandum because they store excess water in winter storage reservoirs within non-impounding offline reservoirs, for subsequent reuse as irrigation during summer drought.
The City of London Corporation would like to share its concerns over the change to criminal liability:
The Bill would move from the current position where an actionable failure has to result from the wilful default of the undertaker to one where criminal liability results from a failure. This major change for those managing reservoirs is likely to result in additional expense.
It does not have the means to meet that expense. Finally, this is also a key issue for the London councils. They have great concerns over the reservoir aspect, the regulatory impact and the criminal liability aspect.
We urge the Minister to review this matter. I have put everybodys concerns to him. I hope that he will be minded to reach a coalition on amendment 34.

Roger Williams: I will be very brief. The hon. Lady has trespassed, albeit with the best of intentions, on to the next amendment. The Bill would reduce the figure of 25,000 to 10,000, and we are discussing an amendment to take it up to 15,000. Those are arbitrary figures that are not supported by good arguments. There must be a balance because we want to safeguard the public while not discouraging the use of reservoirs to trap surplus water when there is surplus rainfall, to minimise abstracting water from aquifers or rivers. I believe that the following amendment is best placed to address this matter, but I will listen to the Ministers reply.

David Drew: Welcome to the Committee, Lady Winterton.
I will make a couple of quick points. There is a danger in the last afternoon of the Committee that we will all get a bit fatigued. Understandably, we want to get through the Bill. As was said by the hon. Member for Vale of York, who is a member of the Environment, Food and Rural Affairs Committee, the situation with reservoirslet alone the way in which we look at flooding and water managementis probably one of the most important parts of the Bill. It behoves us not to just nod this through and hope that it will be all right.
We all remember the problems between Sheffield and Doncaster when there was the potential for a reservoir to break its back, although I cannot remember the name of the reservoir. There are organisations that wish to be statutory organisations. It is fair to say that we will table some amendments on behalf of the Fire Brigades Union on Report, when it will be more appropriate. If there is an incident around a reservoir, it must be absolutely clear who is responsible and who will work together to deal with that responsibility. That is not as easy as it sounds because one water company could own a reservoir in the area of another water company. It would therefore not have manpower that it could suddenly put into the area. We need co-ordinating activities, which I hope is what we are creating with this schedule.
I hope we have all the emergency powers we need to deal with a contingency if we see another situation like the 2007 floods. As we have said in other debates on the Bill, the critical infrastructure is not ideally located. We have not looked much at reservoirs, but many of them are in areas at risk of flooding. Of course, it is no good just putting flood water into a reservoir because that has immense implications for peoples drinking water.
I will use just one example to finish. During the problems in Gloucestershire in 2007, we were looking at bringing in water from Bristol Water, which takes it from the Gloucester-Sharpness canalthat could have been done. However, one of the measures to take flood water away that the Environment Agency has in placeit took me several years to get this from the agencyis by using the Gloucester-Sharpness canal. We have a flood alleviation measure that goes into the drinking water, which we would now need if we had a wider flooding problem.
We cannot just wish away such problems. The issues are really serious and I hope and pray that we are getting them right in the Bill.

Huw Irranca-Davies: I know that the hon. Member for Vale of York was accused of a criminal activitytrespassing on another amendment. I will be interested when we reach that amendment because, heaven knows, I might be open to some persuasion, depending on the strength of the argument.
However, I shall refer to amendment 34. To make clear what we are trying to do, which I think has been welcomed by all hon. Members, we are moving to a system of risk-based assessment of reservoir safety. That is what we have to do. The Reservoirs Act 1975 is not risk-based and we need to look at those reservoirs that pose a risk to people if they are breachednot just those that are large, but those that pose a risk. I do not think that anyone would expect me, as a Minister, to apologise for regulating to protect the public, but the aim is to make the regulation not only risk-based but proportionate. Where regulation needs to be light touch, it will be light touch. The regulatory burden will be kept to the absolute minimum required on those reservoirs that pose little threat, including some reservoirs currently regulated and some on the properties of individual landowners, who will see a reduction in burdens if the risk assessment shows that to be appropriate. However, there is not a non-regulatory alternative.
Let me say why we have come to the figures that we have and what we might be able to do. The amendment would make the meaning of large raised reservoir in the Reservoirs Act apply to reservoirs with a volume capacity of 15,000 cubic metres or more, in place of the 10,000 cubic metres in the Bill. We have considered in some detail what the minimum figure should be, balancing it against advice from professionals and the existing records. That is what we have gone on. We have records that are not complete, because many reservoirs are not recorded, as they are not of that scale. However, we know that we have had incidents involving water holdings between 10,000 and 12,000 cubic metres, or between 10,000 and 15,000 cubic metres. We know they have occurred, and I shall come back to that in a moment.
We reached the figures on the advice of professionals and on records of actual incidents involving potential breaches of reservoirs. First, the profession considers that the 10,000 cubic metres is a realistic minimum for risk assessment purposes, whichlet me make it clearwas supported by the vast majority of experienced engineers who responded to the consultation. By the way, to say who else has rallied behind the proposal, the Institute of Civil Engineers, the British Dam Society and the Environment Agency have coalesced alongside independent, professional engineers. The mode is bang on 10,000 cubic metres, rather than 15,000 cubic metres. This is not a matter of a Minister plucking a sum out of thin air; there is not an exact science, but that is where the figure is at the moment.
We can give further assurance of where we go with the figure now and in the future. First, the extension to 10,000 cubic metres does not mean that all reservoirs with that capacity will be regulated beyond the need simply to register and comply with certain requirements on new builds and major alterations. As part of the risk-based approach that we are introducing, reservoirs not designated as high risk will not have to meet the needs for more routine supervision and inspection requirements. That aspect is getting the burden rightdoing the risk assessment and matching it to the appropriate requirements.

Martin Horwood: One of the issues highlighted by Pitt for high-risk reservoirshe quoted the terrible example of the Ulley reservoir in Rotherham, from where 1,000 people had to be evacuated at very short notice in the middle of the nightwas not only evaluating the risk but communicating it to local communities and first-level responders. Will such reservoirs be part of the critical national infrastructure we discussed in earlier sittings, which the Cabinet Office is supposed to deal with, and what measures may be put in place to communicate that risk and inclusion on the register to local communities?

Huw Irranca-Davies: Yes, some of them will be, based on the inundation maps we are generating to see where the impact of those reservoirs will be, but I will return to that point in a moment.
In the impact assessment we published, we included a summary of a known incident in which lives are at risk from the potential breach of a reservoir with a capacity of about 12,000 cubic metres. A more recent example in the midlands involves a reservoir of between 10,000 and 12,000 cubic metres. We have taken the view, alongside that of the professionals, which has coalesced around the 12,000 figure, that risk assessment should start at that level.
Many organisations and groups have raised concerns about whether the figure is correct and what can be done if it is wrong. One point is that farmers and landowners might benefit from deregulation, as some of the reservoirs will be not only low risk, but remote, so they would not be caught as part of risk assessment. They would not pose a risk to people because they are on farmland far away from built-up areas. Any release of water in those remote locations, away from houses and building, would not be catastrophic.
We recognise that several small reservoirs on farms might come within the 10,000 to 25,000 cubic metre range. I can give an assurance that we will not launch the measures pre-emptively and will consult with farmers and landowners when we come to frame the detailed rules for regulating the reservoirs that pose a risk. We want to ensure that, where those rules can be light touch, they are. We will also look at how we can provide farmers with advice, both on that and on new reservoirs.
With regard to criminal liability, the Reservoirs Act 1975 is concerned with public safety, so that is the focus. That is consistent with the paramount important of public safety, but failure to registerwe are talking about a risk to individuals as well as to homes and businessesis a criminal offence. However, clause 37 of the Bill also provides for civil sanctions, on which we will consult before they are produced, so there is an ability not only to go for criminal sanctions, but to deal with such matters appropriately. The change of criminality from wilful default to strict liability is the same as the need for criminal liability in relation to registration. Strict liability offences are appropriate for public safety legislation. We also intend to introduce civil sanctions as an alternative.
My hon. Friend the Member for Stroud mentioned emergency powers. Schedule 4 includes updated provisions on emergency response plans and extends them to reservoirs larger than 10,000 cubic metres, but based on the risk analysis. Emergency services will therefore also have to provide their plans for handling flood impacts, and we have agreed to give £1.2 million to support their work towards that. We have made the outline inundation maps I mentioned earlier, which show the potential extent of flooding, available to the public because we believe that they have a right to see them. We will make more detailed maps available to emergency planners, who need to drill down to a more detailed level.

Martin Horwood: I am surprised by that, because my clear understanding was that the inundation maps were not currently available to the public. They are available to first-level responders and local authorities, but making them public will have great implications.

Huw Irranca-Davies: They are indeed available, but from the agency, so a member of the public can go and get them if they want. The more detailed information into which emergency planners might need to drill down will be provided directly to them. Those maps for the emergency planners might contain secure information on assets at risk, for example, so we would not make them generally available. There will be arrangements, however, to inform the public of risks and provide warnings, and plans to do that in 2010 are now being developed by the Environment Agency and the local resilience forums.
Under the Bill, there is the ability to revise the cubic capacity upwards or downwards as time goes by, as the evidence shows. Perhaps that is a good point on which to lead before we move to the next amendment, and with that clarification, I ask the hon. Lady to consider withdrawing her amendment.

Anne McIntosh: I welcome the debate. In Scotland, we do not recognise the law of trespass and, as the hon. Member for Cheltenham knows, our names are also on that amendment.
We would like to consider further the Ministers remarks in connection with the next amendment, and perhaps come back at a later stage. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Roger Williams: I beg to move amendment 130, in schedule 4, page 71, line 27, at end add
43 One year after this Act coming into force the Minister shall carry out a review of the regulatory impact of this Schedule on undertakers..
As an MP who represents a constituency with a number of large damsprobably nine really large ones and certainly some small onesI know that a failure of those dams and the release of water is a catastrophic event that can be damaging to human life. This part of the Bill deals with smaller reservoirs, but it is still important. Human safety is an important issue that the legislation should deal with.
There is some concern that the Bill has perhaps got things wrong in terms of the size and scale of reservoirs whose owners who will now have to register them. I am pleased with the introduction of a risk-based approach, as for some reservoir owners that will lead to a reduction in requirements, but I am concerned about the 10,000 cubic metre threshold, and the requirement to register.

Huw Irranca-Davies: Based on the hon. Gentlemans argument and the previous discussion, and having read and analysed his amendment in detail, I will need to take this away and look at the drafting. However, I am inclined to support the thrust of the amendment, and it is right for us to bring it back within 12 months to see whether the amount is right. On that basis, I suggest that the hon. Gentleman considers withdrawing the amendment, and we will bring back something to the same effect on Report.

Roger Williams: I thank the Minister for his generous offer, which the easiest offer I have ever won, and without even trying. I am pleased to beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 4 agreed to.

Clause 34 ordered to stand part of the Bill.

Schedule 5 agreed to.

Clause 35

Provision of infrastructure

Anne McIntosh: I beg to move amendment 19, in clause 35, page 18, line 1, leave out subsection (2) and insert
(2) The regulations must allow a water undertaker or sewerage undertaker to undertake an infrastructure project which is to be put out to tender in accordance with the regulations..

Ann Winterton: With this it will be convenient to discuss the following: amendment 20, in clause 35, page 18, line 1, leave out subsection (2) and insert
(2) The regulations may allow the Minister to prohibit a water undertaker or sewerage undertaker from undertaking a specified infrastructure project which is to be put out to tender in accordance with the regulations for a period of no more than one year from the date of specification..
Amendment 21, in clause 35, page 18, line 6, at end insert
and shall not prohibit the water or sewerage undertaker from preparing its own plan in relation to a specified infrastructure project..

Anne McIntosh: The amendment highlights an unintended consequence of the Bill that the Minister may not be aware of, and the difficulty that the Government have created for themselves. We believe that when allowing major infrastructure projects to be tendered, it is regrettable that under proposed new part 2A, water companies would be prevented from tendering. I do not know whether it is intended, but proposed new section 36B(2) states that water companies are excluded from tendering. The amendments, therefore, are exploratory probing ones, to ask why water companies are excluded, and why a water or sewerage undertaker would be prevented from tendering when they might have the expertise and might be best placed to submit a tender. They might come up with the most competitive tender for a major infrastructure project, and that would help the consumer or the developer. We seek to allow water companies and sewerage undertakers to participate in the tendering process.
Amendment 19, which would perhaps be more elegantly phrased if it said regulations rather than regulators, would allow a water or sewerage undertaker not just to undertake an infrastructure project but to tender in accordance with the regulations. Amendment 20 would allow an incumbent water or sewerage undertaker to tender for and carry out projects from which they are currently excluded, and amendment 21 would enable the sewerage or water undertaker to prepare its own plan for a specified infrastructure project, and therefore participate in the competitive process for major infrastructure projects.
The amendments, I hope, recognise the skills, experience and expertise that the water and sewerage companies hold for the benefit of the customers in those circumstances. Amendment 20 would allow the incumbent water or sewerage undertaker to carry out a project itself, if there had not been a successful outcome to the tender project within a year. We would allow the tendering to run for a year. We believe that it is a missed opportunity that the Government would exclude those water companies, whom we believe might be best placed, from participating in the process.

Roberta Blackman-Woods: It is a pleasure, Lady Winterton, to serve under your chairmanship.
I thank the hon. Member for Vale of York for tabling the amendments. I have great sympathy with her sentiment, and wish to ask the Minister for some clarification as to why water companies or their associates are not able to bid for those large-scale infrastructure projects.

Huw Irranca-Davies: I thank the hon. Member for Vale of York and my hon. Friend the Member for City of Durham for their introduction of, and response to, those amendments, which probe why the Government are where they are on the matter. It is worth while putting some comments on the record.
We have carefully considered these amendments on large, exceptional and/or high-risk water infrastructure projects. The Bill amends the Water Industry Act 1991 to allow undertakers to carry out preparatory work for such projects, but prohibits them from delivering the projects for two main reasons, the logic of which is important. First, the undertaker will manage the tendering process, so it would be a conflict of interest to allow it to participate further in that process by submitting a bid, for example. We have to avoid that conflict of interest.
Secondly, because regulated projects will be exceptionally large and/or high risk, prohibiting undertakers from participating in their delivery should reduce customers exposure to what could be the far-reaching effects of cost overruns, for example, which as we all know are far too common on such large projects. To take advantage of their considerable experience, the Bill requires undertakers to manage the tendering process for such projects. They know the areas and how the projects should go ahead in detail. Nevertheless, the projects subject to the regulations will be of a nature that has not been delivered by the water industry since at least privatisation, if not longer. As such, elements of the projects will require, for example, construction and financial expertise that undertakers may not currently possess, although that is not the same for all of them.
It is not appropriate for undertakers to take risks of which they have little to no recent experience. To return to the point made by the hon. Member for Vale of York, that is all the more important as the customers will ultimately bear such risks. There is the question of assessing where the risk and the burden should lie in such a project. It is worth countering the remarks made, because I think that all hon. Members acknowledge the impressive achievements of the industry in delivering some £85 billion of infrastructure since privatisation. We do not wish the new regulations to be perceived as punishment for a job well done. On the contrary, the regulations will catch only a very few projects in the first place.
Eligibility criteria will be clearly specified on a case-by-case basis after the statutory consultation process. Moreover, if a project meets the criteria that require the provisions to be applied, the resulting tendering process will be planned carefully and executed deliberately. The undertaker will manage the tendering process, and, subject to consultation with Government or Ofwat, will be permitted to define the terms of the tendering proposal. I am going somewhere with this, so bear with me. In that way, the provisions provide scope for the undertaker to the deliver project elements in which it is expert, while tendering for those elements in which it is not. The provisions also expressly permit undertakers to conduct preparatory work, which may, on a case-by-case basis, also include run-of-the-mill project elements.
Finally, the Bill also accommodates the possibility of a failed tender, even though we do not expect an exhaustive process to produce such an outcome. A lengthy tendering process will also make it clear, on a case-by-case basis, whether undertaker-led project planning is warranted. To dictate that an undertaker may always conduct detailed project planning, as amendment 21 does, exposes customers to the possibility of paying for work that ultimately might serve no eventual purpose. We must be aware of that.
The Bill does not prohibit affiliates of undertakers from taking part in the tendering process, including project planning, provided that an undertaker is insulated from its affiliate in case of the latters financial distress, which is an important point. That brings us back to the point about not exposing the customers of a company to the consequences of a large infrastructure project going belly-up. It is crucial to maintain that financial insulation, particularly in light of heightened concern about financial risks.
We acknowledge that establishing affiliates will require several very highly indebted undertakers to renegotiate existing debt covenants at uncertain, and potentially high, cost. Those incremental costs may make their bids less competitive than they would have been without them. However, we note that the covenants that require renegotiation were drafted specifically to protect lenders from risks different from those in the traditional regulated water and sewerage business. The Bill is equally alert to those risks for the very good reason that those very highly indebted companies do not have as much capacity to absorb cost overruns as a less indebted company might have.

Martin Horwood: I am interested in the Ministers argument. Is there not a risk that the best will be the enemy of the good? If companies think they have a good opportunity to tender for the projects and are willing to take those risks, why should they be excluded? Surely that is a decision for them and financiers, not for the Government.

Huw Irranca-Davies: It is about them and their financiers and Ofwat, but also, crucially, the customers. This is the dilemma: if a company overextends itself on a large or potentially high-risk project, and the burden of that does not lie on an affiliate or separate company but on the water and sewerage company, that is literally where, on this occasion, the buck stops, but ultimately the cost will be passed on to the customer.
There is a real issue here. I have already undertaken to meet representatives of the water companies next week regarding other issues that we need to resolve. I have had a brief discussion with representatives of the industry already, and I am happy to put the item on the agenda, to see whether we can find a way forward that squares the triangle. We do not want to expose customers to risk, or to allow companies that do not have expertise, even if they think they do and then go belly-up, to land all that damage on their customers. There is an issue about how we allow companies to use their expertise in some way, perhaps to the benefit of the customers, to get involved in such projects.
Again, I am happy as part of the meeting on Tuesday to put this issue on the agenda and then to come back promptly to members of the Committee with the outcome. Either we will have a way forward or, alternatively, hon. Members can table amendments if we have not made satisfactory progress. With that, I ask the hon. Lady to consider withdrawing the amendment.

Anne McIntosh: If only the rest of the Committees deliberations over the past two weeks had proceeded as smoothly. If the headline is to read, Conservatives set the agenda and the Government follow, it would be churlish of us to persist in this regard. However, we reserve the right to return to the matter on Report. Obviously, we would like to be reminded at the end of the proceedings what the deadline is for amendments on Report. We do not wish to press the amendment to a vote at this stage, but we reserve the right to return to it. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 35 ordered to stand part of the Bill.

Clause 36

Water use: temporary bans

Anne McIntosh: I beg to move amendment 145, in clause 36, page 20, leave out lines 25 to 27 and insert
(2) The following uses of water using a hosepipe or similar apparatus may be prohibited
(a) watering gardens, lawns and landscaped areas;
(b) operating ornamental fountains and cascades;
(c) cleaning private motor vehicles;
(d) cleaning private boats, other vessels and watercraft;
(e) cleaning patios, drives, paths, pavements and other similar artificial external surfaces;
(f) operating private water slides and other water-based facilities designed for the entertainment of children;
(g) filling private ponds (other than fish ponds);
(h) cleaning external surfaces of non-commercial buildings.
(2A) The use of water using a hosepipe or other means for filling private swimming pools, paddling pools, hot tubs and similar bathing facilities may also be prohibited..

Ann Winterton: With this it will be convenient to discuss the following: amendment 146, in clause 36, page 20, leave out lines 38 to 41 and insert
(6) Where a water undertaker makes a specific charge for a use which it prohibits under this section, it must make arrangements for a reasonable reduction of that charge (including arrangements for repayment or credit where the charge is paid in advance)..
Amendment 35, in clause 36, page 20, line 42, at end insert
(8) In this section private motor vehicle means any mechanically propelled vehicle intended or adapted for use on roads other than
(a) a public service vehicle within the meaning of the Public Passenger Vehicles Act 1981(c.14); or
(b) a goods vehicle within the meaning of the Road Traffic Act 1988 (c.52) including any vehicle drawn by a private motor car..
Amendment 36, in clause 36, page 21, leave out lines 16 and 17.
Amendment 37, in clause 36, page 21, line 17, at end insert
(d) set out the reduction in charges to be made under section 76(6)..
Amendment 147, in clause 36, page 21, leave out lines 45 and 46.

Anne McIntosh: The amendments are grouped because they relate to each other. I hope that they are self-explanatory, and encourage the Committee to support them.
Amendments 35, 36 and 37 might appear obscure, but we are seeking to restore in the Bill the definition of private motor vehicle that exists in the Water Industry Act 1991, which the proposed new section amends. This little group, particularly amendments 35, 36 and 37, provides the Minister with an opportunity to explain why the Government have decided not to include, but definitely to exclude, the definition from the Bill, as my understanding is that the definition of private motor vehicle would go some way to protecting certain businesses at times of hosepipe bans, as well as allowing public vehicles to be cleaned. We can all imagine the nature of the public vehicles that would be encompassed by the amendments.
We can think of no apparent reason why the Minister would need to reserve to himself the power of secondary legislation to amend the definition. Perhaps he will take this opportunity to explain why he is seeking to do so. In our view, the definition in the 1991 Act is clear and sufficient for the purposes, and we hope that he will agree to reinstate it so as to avoid any evidence of doubt when the Act is interpreted.
Amendments 145, 146 and 147 are consequential on a previous amendment. Proposed new section 76(2)(c) will allow the Minister to define by order the terms in section 76(2). The Bill requires water companies to offer reasonable reductions in charges when restrictions are placed on use, but there is no definition of what reasonable reductions might be. The Minister should have the power to set out in more detail the reduction of charges expected if water companies cannot, do not or will not offer reductions that consumers consider to be reasonable. We invite the Minister to comment on that.
We propose to omit lines 16 and 17 on page 21 of clause 36. The provision raises concerns about the role of the Environment Agency by giving it the ability to carry out work that might increase flooding or erosion and the responsibility to balance whether the benefits of the work will outweigh the damage caused to human health, the economy, infrastructure or the environment. The amendments question whether the Environment Agency is in the best position to balance those competing interests and, ultimately, to take decisions that could affect many peoples lives. We think that such decisions might best be taken by elected representatives, albeit with the support and co-operation of the Environment Agency.
The original draft Bill that was consulted onI know that a number of issues were raiseddid not give the Environment Agency the power to balance those competing interests. Rather, it allowed the agency to carry out potentially damaging work only when it explicitly would not create or increase the harmful effects. Our amendment would restore the original drafting, which is not perfect, as it still leaves too little a role, but would involve local authorities. The Minister must take this opportunity to explain to us why he thinks the new roles are better.
We also seek clarity on the types of work envisaged and what weight will be given to councils, internal drainage boards and local flood authorities during the consultation process outlined in the conditions set out. Concerns about the water restriction purposes have been expressed by horticultural groups, particularly Johnsons of Whixley, which is based in Vale of York and with which I currently enjoy good working relations. We are trying to balance what the role of the water companies should be, but we are also mindful of the horticultural interest.

Huw Irranca-Davies: I was desperately trying to think of a horticulturist in my constituency that I could mention in a brazen attempt at product placement, but I will hold back. If I name one, the others will all be after me.
Once again, I will be an extremely reasonable Minister. Amendment 36 suggests a list of additional uses for water that a water company may restrict under its own powers, similar to the one that the Department for Environment, Food and Rural Affairs considered should be added when we published the response to our 2007 consultation on changes to the hosepipe ban legislation. The reason why we did not propose the same list ourselves in this clause is that we need to obtain further information on the costs and benefitsas we set out in the impact assessmentby which I mean the potential of each activity to save water and the cost of restrictions to customers.
We sought further evidence on that issue in the consultation on the draft Bill, but we did not get back anything of any great use in response. It is the sort of list that we will be bringing forward, and we do not think that it is far off the mark. If the hon. Lady will consider withdrawing her amendment, we can rapidly turn this round, go back, have a look at the matter and ensure that we have got it right and put it in the Bill. Ideally, we would like to consider each amendment in turn, but we can happily get this on to the Bill.
Other amendments include one that defines a private motor vehicle, and one that removes the provision that enables the Government to define words and phrases in relation to the specified uses of water that can be prohibited. I can see that the amendments have been tabled in the hope and expectation that by including the definition of a private motor vehicle, we will remove the need to use secondary legislation. Our intention is to use the provision for secondary legislation to define not only what is meant by a private motor vehicle, but what is meant by a private garden or using a hosepipe, as there has been some uncertainty about the exact scope of those phrases.
In future, we will also use the provision to define new words and phrases as appropriate, as further uses are added or existing uses amended. As hon. Members have said before, future-proofing holds very true here. Future-proofing in legislation allows the Government to clarify any uncertainties on scope that arise over time. Given the potential impact on customers, it is important that we have this ability to address uncertainties that emerge and refine definitions.
In addition, hon. Members have suggested redrafting section 76(6) of the Water Industry Act 1991 to clarify the requirement for a water undertaker to make a reduction in charges if it has made a specific charge for a use that is subsequently banned, such as in the case of the hosepipe and sprinkler ban. However, we believe that the section as drafted already has that effect, and it does not impose a more general requirement for a reduction in charges simply because restrictions are put in place.
Hon. Members are also seeking an amendment to include provision for the Minister, by order, to set out the reduction in charges to be made by water undertakers in respect of prohibited uses. It is entirely right that, where appropriate, reasonable reductions should be made, and that is what we are seeking to ensure. The precise detail of tariffs and reductions is a matter for the economic regulator to agree with the water undertakers.
Finally, hon. Members have proposed an amendment to remove the requirement for water undertakers to publish details of how representations may be made in respect of any temporary bans. That would remove a basic but important element of the duty to act fairly when exercising statutory powers, which enables customers to draw attention to potentially unforeseen impacts and to ensure that the water undertaker considers them before imposing those restrictions. The processes outlined in this clause will help to ensure that water undertakers act proportionately in response to water shortages. It strikes that balance between the needs of the water undertakers to conserve water and the interests of the customer who may be affected by that decision. Given that clarification and the offer to come back with an amendment on clause 36 once we have considered the drafting, I hope the hon. Lady will consider withdrawing the amendment.

Anne McIntosh: The Minister is being very generous and gracious, so we will pursue this matter further with him. For the present, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Roger Williams: I beg to move amendment 27, in clause 36, page 20, line 42, at end insert
(8) A water undertaker must exercise its powers under this section in conformity with the relevant code of practice under section 76D..

Ann Winterton: With this it will be convenient to discuss amendment 28, in clause 36, page 22, line 42, at end insert
76D Codes of practice
(1) There shall be a code of practice for England and a code of practice for Wales, issued by the Minister, about water undertakers exercise of their powers under section 76.
(2) Each code must, in particular, contain provision for the purpose of ensuring that
(a) water undertakers exercise their powers under section 76 in a way that is proportionate to what is sought to be achieved and that is fair as between different users or groups of users of water,
(b) variations in the exercise of powers under section 76 as between water undertakers for neighbouring areas are kept to a minimum, and
(c) persons affected by the exercise of a power conferred by that section receive clear and timely information about its effect.
(3) In subsection (2)
(a) the proportionate exercise of powers includes the introduction, or consideration of introduction, of less restrictive measures (such as restriction of hosepipe use to alternate days or to particular purposes) unless and until the water undertaker is satisfied that more restrictive measures are necessary, and
(b) the fair exercise of powers includes their exercise in a way that reflects the relative efficiency of different uses of water.
(4) The Minister
(a) may vary or revoke a code, but
(b) must ensure that a code has effect at all times when section 76 is in force, and
(c) must ensure that each code, as it currently has effect, is published in such way as the Minister considers appropriate.
(5) Before issuing, varying or revoking a code, the Minister must consult persons who in the Ministers opinion represent interests likely to be affected by water undertakers exercise of their powers under section 76.
(6) In this section
code means a code of practice under subsection (1), and
the Minister has the meaning given by section 76A(4)..

Roger Williams: After three comparatively wet summers in most of the UK, it seems a long time since hosepipe bans were part of UK life. However, in anticipation of a drier summer in future, they are worth considering. The amendments would effectively place a duty on the Secretary of State and Welsh Ministers to issue a code of practice for hosepipe bans, and a duty on water companies to conform to it.
As I understand it, water companies issue codes, but they are not very coherent or uniform, and that makes it difficult for people to comply with them. Subsection (2) of proposed new section 76D of the Water Industry Act 1991 would require each code to aim for three goals. They are, broadly, our old friends proportionality and fairness; minimum variation between neighbouring companies; and adequate information for consumers about what is and is not permitted. They are designed to respond to the concerns explained in the Horticultural Trades Associations comments on the Bill.
Subsection (4)(a) would make it clear that proportionality includes a graduated approach to the exercise of powers under section 76. The code should clarify that, unless there is good reason to the contrary, a water company should introduce narrower, more tightly focused restrictionssuch as hosepipe use on alternate days or for a particulate purpose, such as gardening, rather than car washingbefore broader, indiscriminate ones.
Subsection 3(b) would provide that fairness includes taking account of differences in the efficiency of water use.
The proposed new section is not prescriptive, so the Secretary of State and Welsh Ministers will have discretion over the exact provision that should be made to further the goals.

Angela Watkinson: Is it the hon. Gentlemans intention to include in the amendment protection for, for example, the horticultural industry and those who run garden centres and so on? In conditions of severe drought, they can be in danger of losing their stock, which would have a grave financial impact on the viability of their businesses.

Roger Williams: I thank the hon. Lady for raising that point. As I understand it, commercial organisations are not covered by the restrictions. The horticultural industry is concerned because a broad ban makes peoples gardens difficult to maintain and leads to death and disease in plants, which could be avoided in the case of a more discrete ban.
Subsection (3) would provide flexibility by enabling a code to be varied or revoked, but a code must be in place at all times while section 76 is in force. When a code is revoked, a new code would have to take effect at the same time.
The proposed new section does not set out any formal procedure for issuing, varying or revoking a code, but subsection (5) requires consultation before a code is issued or varied. The requirement is drafted in identical terms to the equivalent provision in clause 35proposed new section 36G(2) of the 1991 Act.
Subsection (4) would also require the current version of the code to be made available to the public.

Huw Irranca-Davies: I appreciate the spirit of the amendments, which would require the introduction of and conformity with a statutory code of practice, whereby water undertakers used their powers to introduce temporary bans in times of water shortage.
As the hon. Gentleman said, water undertakers have a statutory duty to supply water for domestic purposes, such as drinking, cleaning and cooking. When water is in short supply, water companies must be able to restrict the use of water for non-essential purposes. Their drought plans, on which they rightly have to consult publicly, set out the way in which each water undertaker would deal with drought in their own area. That varies from area to area, depending on the topography and other local factors. The plans also include the triggers that cause the water undertakers to initiate a range of actions.
The water industry has indeed responded to Government proposals to produce a code of practice, and it has done so. The code concentrates on exactly the principles that the hon. Gentleman is trying to achieve, particularly those in respect of proportionality, consistency and transparency.
However, we acknowledge that, as we have seen in the past in the UK, droughts are not uniform events in terms of either location or duration. We firmly believe that undertakers must be able to react speedily and with flexibility to conditions in their area of supply, working with others to ensure that they have the plans right, so that they can achieve the objective of conserving water for domestic uses and for preventing the need for more restrictive measures to be put in place.
The order-making power at proposed new section 76(A)(2) allows the Secretary of State, or Welsh Ministers in Wales, to provide further detail as to the extent of the power by defining a word or constraining the extent of the power, for example, or by providing for exceptions to the restrictionsby preventing water companies from restricting certain businesses from using water if the negative impact on their business would outweigh the benefits of conserving the water, for instance.
The Government will keep under review how each water company exercises the powers and, taking into account the public interest, may adjust the powers using the secondary legislation provision in proposed new section 76(A)(2), if they think that appropriate. We can do what the hon. Gentleman suggests, and we willwe have tokeep this issue under close review. I hope that, with that assurance, he will withdraw the amendment.

Roger Williams: I have listened to the Ministers response and explanation. On the basis that it is possible to refine the hosepipe ban, and not make it a broad ban, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 36 ordered to stand part of the Bill.

Clause 37 ordered to stand part of the Bill.

Clause 38

Incidental flooding or coastal erosion: Environment Agency

Roger Williams: I beg to move amendment 123, in clause 38, page 22, line 42, at end insert
(d) dwellings,
(e) the protection of agricultural or other commercial interests..

Ann Winterton: With this it will be convenient to discuss amendment 124, in clause 38, page 23, line 16, at end insert
(e) the views of owners and occupiers of land likely, in the opinion of the Agency, to be directly affected by the carrying out of the work..

Roger Williams: I will not detain the Committee for long, but clause 38 is important. It gives considerable powers to the agency to carry out work for the purposes of natural and cultural conservation and amenity. However, the power does not extend to the protection of commercial interestsincluding agriculture or the protection of peoples homes, all of which could be put at significant risk by flooding. Moreover, it suggests that we put the agency in the position of having to tell someone who lives on the coast and whose home is at imminent risk of destruction by flooding, that, while it can intervene to carry out works to protect biodiversity, it cannot intervene to protect the dwelling.
As such, the proposed power needs to be extended. We are not saying that it should be exercised as a matter of course, but it will probably be needed only in exceptional circumstances. Where it should be needed, it should be available. On that basis, I am prepared to listen to the Ministers explanation.

Huw Irranca-Davies: I hope that I can give reassurance and work with the hon. Gentleman in the spirit of his amendments.
Amendment 123 will allow the agency to cause flooding in the interests of dwellings or the protection of agricultural or other commercial interests. It sounds like a wholly reasonable suggestion and I appreciate the intentions behind it. However, it is not necessary.
The agency already has the power to reduce the potential harmful impacts of flood erosion under the Coast Protection Act 1949, the Land Drainage Act 1991 and the Water Resources Act 1991. All amendments to those Acts will be made under schedule 2, when the Bill is enacted. It might be helpful to explain that clauses 38 and 39 are necessary to enable authorities to carry out works that cause flooding, an increase in the amount of water below ground or coastal erosion for the beneficial effects of the environment, as opposed to reducing the risks from those processes. That is necessary because certain important aspects of the environment depend on those processes to sustain their interest.
However, it is just not clear how causing flooding or erosion could benefit dwellings or the protection of agricultural or commercial interests, other than for the purposes of general flood or coastal erosion risk management, so the capacity to do what the hon. Gentleman is proposing already exists within our legislation. His amendment is not necessary and is a wee bit confusing.
Let me move on to amendment 124. It would require the agency to have regard to the views of owners and occupiers of land likely to be directly affected by works carried out under its powers in the clause. I could wax lyrical about why that is not necessary, but I understand the spirit in which it is intended. Unlike the previous amendment, it would not affect the Bill materially, but signal what we are intending to do. If we can take the proposal away and have a look at it, we are pretty confident that, with a bit of redrafting, we can bring something back that would do exactly what the hon. Gentleman wants. I hope that he will accept my assurance and, hopefully, when we debate the Bill on Report, we shall table an amendment that will have the same effect.

Roger Williams: I thank the Minister for taking away the proposal and perhaps coming back with something that will make it a duty of the Environment Agency to consult and inform landowners of what it is about to undertake. On that basis, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Anne McIntosh: I beg to move amendment 38, in clause 38, page 23, leave out lines 1 and 2 and insert
(3) Condition 2 is that in carrying out the work the Agency
(a) has regard to the national flood and coastal erosion risk management strategy under section 7, and
(b) does not create or increase potential harmful consequences of a kind listed in section 2(4)(a) to (d)..
Clause 38 raises serious concerns about the role of the Environment Agency, and we tabled the amendment to find out whether the Minister would consider that other agencies are better placed to work more closely with the local authority. It is a probing amendment, aimed at eliciting why such a reduced role is envisaged for local authorities. Will the hon. Gentleman explain why he prefers his drafting to ours? We want to know whether the best placed authority is the local authority or the EA.

Huw Irranca-Davies: I thank the hon. Lady for the way in which she explained the probing amendment. It is worth my saying at the outset that I recognise and support the need to have regard to the national strategy and to avoid any potentially adverse effects of projects carried out under the provisions. The amendment is not necessary because the Bill already takes account of such issues. I accept that she is probing at something, and it might be useful to clarify the role of local authorities and others. There are similar powers for local authorities under clause 39 as well. I hope that that has helped the hon. Lady. We do not regard the provision as exclusive because local authorities have a role to play.

Anne McIntosh: I am most grateful for the hon. Gentlemans explanation. Having had the debate, it gives me great pleasure not to have to press the amendment further. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Anne McIntosh: I beg to move amendment 125, in clause 38, page 23, line 39, at end insert
(16) The Minister must by regulation provide a right of appeal against a decision by the Agency to exercise the powers in this section.
(17) The regulations must
(a) confer jurisdiction on the Minister a court or a tribunal and
(b) make provision about procedure..

Ann Winterton: With this it will be convenient to discuss amendment 128, in clause 39, page 25, line 10, at end insert
(16) The Minister must by regulation provide a right of appeal against a decision by the Agency to exercise the powers in this section.
(17) The regulations must
(a) confer jurisdiction on the Minister a court or a tribunal and
(b) make provision about procedure..

Anne McIntosh: The Committee will note that amendment 125 stands in our name and amendment 128 stands in the names of both official Opposition and Liberal Democrat Members.
These two important amendments go to the heart of the debate we had on day one or two of the Committee, regarding the far-reaching powers of the Environment Agency, particularly under clause 38. The Bill has no appeals mechanism against the Agency by any who run foul of its decisions taken under clause 38. We would like to see among the duties that the Environment Agency is asked to carry out in this regard, reducing, by regular maintenance, the incidence of flooding.
Amendment 125 insists:
(16) The Minister must by regulation provide a right of appeal against a decision by the Agency to exercise the powers in this section.
(17) The regulations must
(a) confer jurisdiction on the Minister a court or a tribunal and
(b) make provision about procedure.
We are slightly alarmed by clause 38. We support the role of the Environment Agency in this regard and believe it is best placed to act, but it is important, as in other clauses earlier in the Bill, to have a right of appeal. We ask the Minister to share our concern and express his view as to why no right of appeal has been given.
There must be a difference between amendments 128 and 125 but I do not immediately see what it is. We hope that amendment 125 will meet with the support of the Committee.

Huw Irranca-Davies: We have been making good progress and I hope we can here. The amendments seek to place the additional safeguard of a right of appeal against the Environment Agencys decisions under the powers of clause 38; and, in the case of clause 39, a right of appeal against local authorities and internal drainage boards.
It is right for peoples rights to be protected and I believe the Bill provides adequate safeguards, through the rights of appeal for property owners, through provisions in respect of compulsory purchase and compensation, which are based on those in the Water Resources Act 1991. Projects implemented under the powers in clauses 38 and 39 will be subject to the same regime of consents and safeguards as any other project carried out under different powers by public bodies, developers or individuals. For works that go beyond minor improvement or routine maintenance, planning permission will generally be needed under the Town and Country Planning Act 1990. The local authority planning process ensures that interested parties are consulted and the opinions of the community are heard and taken into account. Well-established safeguards are associated with the process and the planning authority is, of course, accountable for its decisions, which can be judicially reviewed. It would not make sense to establish a new process that duplicated the checks and balances of the existing planning process.
For work of a more routine and minor nature that would not require planning permission, a wide range of consents and permissions is required in different circumstances. To add a further appeals regime specifically for works carried out under these clauses would be disproportionate, inappropriately bureaucratic and highly burdensome for the Environment Agency, local authorities and internal drainage boards.
Furthermore any change of agricultural land use that does not need planning permission, but is nevertheless likely to have a significant effect on the environment, will require an environmental assessment and consent from Natural England under the Environment Impact Assessment (Agriculture) (England) (No. 2) Regulations 2006. This assessment must include consultation with the public, thus providing an opportunity for interested parties to make their views known to the decision makers.
Finally, any person wishing to challenge the exercise of the Environment Agency powers under clause 38 would have the option of judicially reviewing a decision. I therefore believe that there are already adequate safeguards in the system to ensure that these powers cannot be used to promote inappropriate projects, so the amendments, while well intentioned, are not needed.
Amendment 128 refers to a right of appeal against a decision by the agency in the exercise its powers under clause 39. However, clause 39 gives powers to local authorities and internal drainage boardsthe point that the hon. Lady was pushing towards therenot to the Environment Agency. I assume therefore that the amendment was intended to refer to right of appeal against the decisions of local authorities and internal drainage boards. If this is the case, the argument against amendment 128 is the same as that against 125 and, again, I do not agree that it is necessary. I therefore ask the hon. Lady to withdraw the amendment.

Anne McIntosh: I am most grateful to the Minister for summing up so generously. I hope that he will take our concerns on board, particularly as regards amendment 125. We will keep this under review. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 38 ordered to stand part of the Bill.

Clause 39

Incidental flooding or coast erosion: local authorities

Roger Williams: I beg to move amendment 126, in clause 39, page 24, line 5, at end insert
(d) dwellings,
(e) the protection of agricultural or other commercial interests..

Ann Winterton: With this it will be convenient to discuss amendment 127, in clause 39, page 24, line 26, at end insert
(e) the views of owners and occupiers of land likely, in the opinion of the Agency, to be directly affected by the carrying out of the work..

Roger Williams: These amendments in some ways mirror amendments 123 and 124, only clause 39 applies to local authorities rather than to the Environment Agency. The amendments are the same. There is a concern about the powers that local authorities have to enter land and do work that does not include houses and commercial businesses. The Minister has given his answer to that. The other concern is to get the agreement of the landowner before the work is done or certainly to inform the landowner about the extent and nature of those works. The Minister was very generous in replying to the previous amendment. If he could be equally generous on this one, we could come to an arrangement.

Huw Irranca-Davies: I will endeavour to come to some arrangement now if I can. Amendment 126 sounds wholly reasonable. It would give local authorities and IDBs powers under clause 39 to cause flooding, an increase in the amount of water below ground or coastal erosion in the interests of dwellings or the protection of agricultural or other commercial interests. However, it is not necessary because local authorities and IDBs already have the powers to do things to reduce the potentially harmful effects of flooding or erosion on dwellings and agricultural or commercial interests under the Acts that I referred to previously.
It may be helpful to explain that clause 39 is about enabling authorities to carry out works that cause flooding, an increase in the amount of water below ground or coastal erosion for the beneficial effects on the environment, as opposed to reducing the risks from those processes. That is necessary because certain important aspects of the environment depend on those processes to sustain their interests. However, it is not clear how causing flooding or erosion could benefit dwellings or the protection of agricultural or other commercial interests. The debate is similar to the one that we had on clause 38.
In respect of amendment 127, my comments will be similar to what I said before. I think that the thrust of the amendment is broadly there. We need to consider the drafting and I am happy to take the amendment away and consider it, with a view to bringing something back on Report that achieves a similar result. I think that, on balance, what we have in the Bill already will deliver it, but to sum up the intention behind it and put it clearly in the Bill, I am happy to give that assurance.

Anne McIntosh: I am grateful to have had this opportunity. These serious matters were raised with us by the Country Land and Business Association, which is why the amendments stand in our name. I am delighted that we have had the opportunity to debate them and I hope that the Minister will keep the matter under review.

Roger Williams: On the basis that the Minister has offered once again to consider this proposal to see how it could go in the Bill, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Huw Irranca-Davies: I beg to move amendment 62, in clause 39, page 24, line 39, leave out under and insert carried out in reliance on.
This technical amendment adds greater precision and creates consistency in language between subsections (10) and (11) of clause 39. It is important to have such consistency, as otherwise the implication is that the two provisions have different meanings. The two provisions provide for grants to be paid by the Environment Agency and Welsh Ministers in respect of work carried out in reliance on the new environmental works powers, which are given to various risk management authorities by clause 39.

Amendment 62 agreed to.

Clause 39, as amended, ordered to stand part of the Bill.

Clause 40 ordered to stand part of the Bill.

Clause 41

Agreements on new drainage systems

Huw Irranca-Davies: I beg to move amendment 63, in clause 41, page 26, line 8, after Schedule 3 insert
to the Flood and Water Management Act 2010.
The amendment is a technical one. It is to ensure that the reference to schedule 3 refers to schedule 3 of the Bill; it is necessary to avoid confusions.

Amendment 63 agreed to.

Question proposed, That the clause, as amended, stand part of the Bill.

Nia Griffith: Clause 41 is extremely important because it will safeguard new house owners from the nightmare of having to pay for repairs. Many people across the country might not even know that they were going to be responsible for such repairs, and they find themselves faced with enormous bills. It is extremely important that we have the clause to tighten up the legislation and make it absolutely clear that from now on, no one will face that situation.
However, my concern regards the long delays that we have had in the adoption of existing sewers by the water companies. We still have people who have been waiting for some considerable time. They know that a survey has been undertaken and that work has been done to ascertain the magnitude of the problem up and down the country. However, they are very anxious now to see that the appropriate measures are put in place for those sewers to be adopted. If there will not be anything in the Bill to do that, will the Minister explain why that is the case? What I can say to my constituents on such an important issue?

Roberta Blackman-Woods: I rise to seek some reassurance from the Minister that the new sewers and natural drains will not be connected to the public sewerage system until they comply with the universal building standards that are to be prescribed by him, and that those regulations will link to the current building regulations.

Huw Irranca-Davies: I think I can bring good news to my hon. Friend the Member for Llanelliwe have spoken about the matter on numerous occasions. The good news is that the powers for transferring in Wales already exist. We established them in the Water Act 2003, so that Welsh Ministers can make regulations about transfer. Of course, that is a devolved issue.
Let me put on my MPs, rather than my Ministers hat for a moment. Like my hon. Friend, I have a desire for the measure to apply to some of the estates in my area, where the sewers have not been adopted, and houses that were built in the 50s, 60s and 70s have been extended. The sewers were substandardthey are now crumbling, and the bills are landing on the doorsteps. I therefore share my hon. Friends desire to see the urgent roll-out of the measure.
We have made it clear in England that transfer will be effected in 2011. I can tell my hon. Friend that, while it is a devolved issue, the approach to be taken in Wales has been set out in the strategic position statement, which I have seen on the website and is worth looking at. The timing and the detailed roll-out are, as both of us powerful pro-devolutionists know, a matter for Welsh Ministers. However, as MPs, I am sure that we will lobby the relevant Ministers in the Welsh Assembly Government to take the matter forward as quickly as possible.
On the comments made by my hon. Friend the Member for City of Durham, may I write to her with a detailed response, as she raises quite a technical issue? It is not directly related to the clause, but I am happy to write to her and give her the clarification that she needs.

Question put and agreed to.

Clause 41, as amended,accordingly ordered to stand part of the Bill.

Clause 42

Drainage: concessionary charges for community groups

Anne McIntosh: I beg to move amendment 39, in clause 42, page 26, line 42, leave out may and insert shall.

Ann Winterton: With this it will be convenient to discuss the following: amendment 40, in clause 42, page 27, line 8, at end insert
(3A) In determining which community groups qualify for concessionary charges, undertakers shall include as a minimum the following groups
(a) places of religious worship,
(b) properties owned by Scout and Guide Associations and similar youth groups,
(c) community amateur sports clubs and similar types of sports clubs,
(d) village and community halls, community centres and similar buildings owned, or leased by non profit making community associations..
Amendment 162, in clause 42, page 27, line 19, at end insert
(5A) Such guidance shall include reference to the Governments recommendation of what is a fair and affordable charge for community groups to pay for surface water drainage..

Anne McIntosh: I hope that the reason for my tabling the amendments is clear and that the Committee might be cajoled, seduced and attracted into supporting them.
Amendment 39 would insert shall in place of may, which would force water companies to provide for a reduction in surface water charges for community groups. We Conservatives are delighted to have secured this concession. I pay tribute to my hon. Friend the Member for Arundel and South Downs (Nick Herbert), who leads for us as shadow Secretary of State on such matters and was instrumental in achieving the concessions. We welcome the Governments decision to follow our course and introduce provisions to deal with the problems caused by companies moving to site area charging for surface water drainage. It is fair to say that not all water companies were caught out. I pay tribute to Yorkshire Water as being exemplary, and bringing in provisions that did not do that. I am delighted that other water companies will achieve best practice in this regard.
It should be up to water companies, who know their customers, to be responsive to their needs, with the input of the Consumer Council for Water. However, the Government have not published guidance and without it, it is difficult to know how Ministers intend to implement such schemes.
Amendment 39 is a probing amendment that is designed to give the Minister the opportunity to explain in more detail the Governments plans and say whether they intend to publish guidance and on what date they will do so.
Similarly, amendment 40 sets out the minimum for community groups qualifying for concessionary charges. The amendment provides the opportunity for the Minister to set out in more detail those organisations to be covered in a concessionary charging scheme. We accept that many organisations might be eligible for concessionary charges, but the Committee will be impressed that the list should
include as a minimum
following cross-party representations to us
places of...worship...Scout and Guide Associations and similar youth groups...community amateur sports clubs,
which, as well as finding it difficult to meet the extra charges, can ill afford mitigation measures such as the installation of other drainage systems. We are well aware that they are currently already suffering from reduced revenues during the recession.
Again, this is a probing amendment tabled so that the Minister can place on the record today which groups the Government plan to include in their guidance, how advanced the guidance is and when they intend to publish it. I should also like to know how they intend to advise water companies to proceed, because I think that those companies would accept that guidance.
We accept that water companies know their customers and are best placed to judge them, but they are not agents for social policy. We hope that the guidance that the Minister intends to publish will make clear, in recommending it, the test that water companies should apply to potentially eligible customers. We hope that Ministers will also make clear whether they intend to allow publicly run premises, such as schools, hospitals and other public buildings, to be included, because that is a slightly grey area. Their inclusion would increase the cross-subsidy required from other customers to a potentially unacceptable level. That would not be fair, given that they should have the resources to mitigate the charges and that they should see the benefit of reduced bills in future.
Does the Minister accept that it would mitigate the expense and the cross-subsidy required if the Committee sent out a positive message that we would encourage all those groupspublic bodies and private and voluntary groupsto store grey water? It would help to mitigate the cost across the board. I know that the Select Committee on the Environment Food and Rural AffairsI have the honour of being a memberis keen on the idea. However, we have not had the opportunity to debate it, and I would like to return to the subject.
Nevertheless, there will be a cost. Yorkshire Water seems to achieve this without going down the path of having a cross-subsidy. Can we mitigate the cost by asking those groups to store water?

Huw Irranca-Davies: On that point, I have discussed the matter with Scouts, churches and other organisations, and they are powerfully behind such an amendment. Indeed, the Bill will not only encourage but incentivise the uptake of SuDS, regardless of the concessionary schemes for which the clause provides. The hon. Lady is right to say that will act as an incentive in the drive towards more sustainable systems.

Anne McIntosh: I am absolutely delighted. The Energy Saving Trust gave evidence to the Select Committee, and there is a huge amount of work going on. I am delighted to have won a concession, but there is a slightly difficult situation with the water companies, and we would welcome any guidance that the Minister can give us on amendments 39 and 40.

Nia Griffith: Different circumstances pertain in different part of the country. Scout and Guide groups in Wales that are supplied by Welsh Water have not yet had these bills landing on their doorsteps. I seek an assurance that companies will not be pushed into unnecessarily inventing or making charges, but that if they decide go down that route, we will have appropriate mechanisms to protect such community groups and to ensure that they are not unfairly charged.
If we have too prescriptive a list, valuable organisations could be missed. The danger is that they might be offended that some were included but not others. I would prefer it if we could stick to generalities, which guaranteed that affected groups would be subject to the strictures of the clause, whether or not they had yet been involved.
While we are on the subject of fairness, and trying ensure that we do not unduly penalise anyone, will the Minister tell us what progress he has made on other forms of social tariff? I ask in case we do not have the chance to debate the relevant new clauses.

David Drew: I am delighted to speak to amendment 162, which deals with the third part of the arrangements that voluntary bodies have asked us to provide. It follows directly from what was said by the hon. Member for Vale of York.
I pay tribute to my hon. Friend the Minister; he must have met more Scouts than the leader of the scouting movement. We know more about his woggle and the colour of his neckerchief than some would like.
Charging is still something of a running sore for the organisations, which ran a major campaign, but it was not helped by one water company, United Utilities. With amendment 162 we seek to clarify exactly what the Government intend for the water companies as we move towards site charging. The Government have been very clear and want to rule out unaffordable increases in the water bills of those organisations. However, they have not quite said what unaffordable is. We need clarity on what is meant by that. As my hon. Friend the Member for Llanelli rightly says, some companies did not rush towards site charging. Other water companies such as my own, Severn Trent Water, were very fair and were willing to look at percentage discounts, which is the model I would prefer us to follow. However, United Utilities, almost gleefully, wanted to maximise the impact on charities and voluntary organisations by moving towards site charging.

Anne McIntosh: I congratulate the hon. Gentleman both on tabling the amendment and on moving it in such a courteous manner. How prescriptive should the guidance be, bearing in mind the changes across the various water companies?

David Drew: I heard what my hon. Friend the Member for Llanelli said and I would make the guidance quite prescriptive because we have seen the problems when water companies are allowed to indiscriminately make the rules up as they go along. It may be that it is not appropriate for us to do it in Committee, but by Report the Government should bring out a clear code of practice that lays down the methodology they believe should be put in place to deal with the issue of affordability, and rule out any form of unaffordability in terms of the social tariff that those groups should pay.

Angela Watkinson: In support of the hon. Gentlemans amendment, as an ambassador for guiding, which is one of the listed organisations, I know that a lot of community organisations do not have any income. They operate on a break-even principle if they are lucky. If water companies examine their income, it will be a very difficult way of establishing any charge at all.

David Drew: Of course that is the case and that is why we need a clear template to ensure some consistency and that there are fair water companies who are not trying to usurp their authority.
Clearly, the organisation that should be overseeing the process is Ofwat. Yet again there is no clarity in Ofwats role. It would be very useful for the Minister to say that if we have the template in place, Ofwat should be the arbiter of how it is applied. It should have a very clear responsibility to ensure that we do not go through another situation such as the one we went through last year.
Being very parochial, I am hopeful that the Severn Trent Water approach is the way we proceed with percentage discounts. That is subject to discussion and, dare I say, argument, but we need to ensure that Ofwat is the appropriate organisation to oversee what is happening, so that it is fair and reasonable and not subject to the sort of things we saw before, and subject to the changes.
I am very happy for us to move towards more innovative thinking in that regard. I never believed, in all the debates and lobbies that have taken place, that organisations in the third sector should just carry on as they are. Clearly, many of the organisations have a site area, so they could look at ground water harvesting. However, to do that, they have to have the means. If we are talking about a scheme, I am happy for us to have some flexibility so that we could move towards different forms of water management, but there has to be investment in the operation of those schemes.
I have given the Minister a lot to answer, but it is an important issue and Parliament in general and the Government in particular took a lot of flak on it. I am glad that we have listened and I am glad we responded, but let us actually nail down now how the water companies should be asked to respond, what role there is for Ofwat, how we could move to new forms of water drainage, and how it is to be funded.

Roberta Blackman-Woods: I congratulate the hon. Member for Vale of York on introducing these probing amendmentsthey are very helpful. My hon. Friend the Member for Llanelli is very fortunate if community and Scout groups in her constituency have not yet received higher bills. I am afraid that situation does not pertain in Durham. I am pleased that the Minister has listened to the many representations made by the voluntary community, MPs and so on, and that he has brought forward the clause. Nevertheless, a number of water companies would like some guidance about how to operate the provision effectively, particularly on how they could do so in a fair and consistent manner. I am keen to hear my hon. Friends comments on that.

Martin Horwood: This is my first opportunity to say what a pleasure it is to serve under your chairmanship this afternoon, Lady Winterton. It is a shame that it is only for one sitting, but we seem to be making efforts to prolong the pleasure, so that is fine. I am pleased that the clause has been included in the Bill, but it is unfortunate that, as the hon. Member for Vale of York rightly said, although area-based charging has been successfully introduced in many areas with enough sensitivity to avoid many of the problems, poor implementation in just one area has threatened community groups, churches and others with wholly unfair and unreasonable charges. The measure raises issues regarding the proactive role of Ofwat in relation to such matters, but that is something we might return to shortly when considering other amendments.
I certainly welcome the fact that the clause puts beyond doubt the unacceptability of the practices that have been mentioned. We welcome all three amendments, because they would put the matter even further beyond doubt. That would be helpful. The second reason why I welcome the clause is that it sets a rather important precedent in terms of timing. It is a proposal for a concessionary charging scheme, and it clearly demonstrates the Governments ability to legislate at short notice, when necessary, on what might be called socially responsible charging or tariffs. If that can be done for the Scouts and for churches, it should be done for some of our least well-off citizens as well. If, for any reason, we do not actually reach the debate on new clause 1 this afternoon, I put on the record my desire to return to the broader issue of social tariffs on Third Reading.

Huw Irranca-Davies: I am extremely grateful for this opportunity to respond. There is clear support in the Committee for the thrust of the clause. I will turn to the amendments in a moment. Hon. Members will be pleased to know that I will not go through the history of the matter, and I will not try to attribute praise either. I am glad that all parties have coalesced around the measure.
I had some interesting meetings in my office with Mr. Brian Moore of England rugby fame and Mr. Mike Gatting. Those meetings were lively and punchyalthough there was no physical violencebut also productive. Probably the most attended and populated meeting that we members of the Committee and many other MPs have ever had was the one that the Scouts organised in Portcullis House.

Anne McIntosh: On that point, the hon. Member for Colchester (Bob Russell), who is, of course, a member of the Chairmens Panel, will be hugely disappointed if we do not congratulate the Minister on convening that meeting.

Huw Irranca-Davies: The simple fact is, for all the denigration of Parliament, an incident such as that shows that we do respond and listen. I take no credit for that.
Many of the points have already been made, so let me give a short history of the subject. Four companies introduced the schemes and, by and large, in three areas at least, those schemes had been progressing well. We always felt, curiously, that we had the structure to make the schemes work. However, I made it clear that if that could not be done and it was necessary to fix the problem legislatively, I would do so. So here we are today. That shows that this place can sometimes do the right thing.
I thank my hon. Friend the Member for Stroud and other hon. Members for tabling the amendments and for speaking in support of them. Amendment 39 would require, rather than allow, water and sewerage companies to set concessionary surface water drainage charges. Amendment 40 would place certain community groups in the Bill. Amendment 162 would require the Secretary of State and Welsh Ministers to say in guidance what constitutes a fair and affordable surface water drainage charge.
I refer Committee members to the copy of the draft guidance to water and sewerage undertakers. This is an exclusive sneak preview for Committee members because it is not yet in the public domain. The draft guidance deals with the issues that they have raised. It elaborates on, and lists, the types of groups that should and should not be included.

Anne McIntosh: We are not short of papers, but I wonder if I have missed something, because I do not think that I have seen the draft guidance. That is very remiss of me.

Huw Irranca-Davies: I apologise for the fact that the hon. Lady has not seen the guidance. I have just sought clarification. The hard copy was sent on the first day of the Committee. I will ensure that she and other hon. Members receive a copy if they do not have one. It has also been sent by e-mail.
We have done a lot of work. Who should and should not be included in the guidance is laid out copiously. I reassure my hon. Friend the Member for Stroud that there is an indication of the type of charge, but the charge is not specified because the document must be future-proof. It goes into detail about the type of consultation that is necessary to bring forward any charging scheme.
When we met the Scouts, the Churches, community associations, the Central Council of Physical Recreation and others, it was interesting that they did not want individual householders to be disadvantaged as a result of the concessionary scheme, and did not want disproportionate bills to impact on others. They understood that it will be the responsibility of the water company, the regulator and the consumer bodies to sit down, talk the matter through and come up with a scheme that is appropriate for the area. A church should not suddenly find that it is saved from excessive bills, only for the parishioners to go to their parish priest or minister and say, Thanks very much, my bill has gone through the roof. We need to get the matter absolutely right.
I know that hon. Members will look at the guidance, and I would be grateful to hear, perhaps on Report, whether they think it is right or whether it needs tweaking. The spirit of the guidance is to say to water companies, consumer representative groups, voluntary sector groups and so on that if a company has a proposal that provides the incentive to develop surface water drainage schemes, they need to sit down and talk through the implications. The hon. Member for Vale of York should not have representatives of businesses in her constituency walking through the door saying, Thanks for nothing. You have saved others, but youve just skinned us alive. We therefore have to get the matter absolutely right. Rather than prescribing a set amount and fixing it for ever and a day, we are instead fixing for ever and a day the idea that if a company brings forward one of those schemes, it has to consult, get it right and balance the equation, as regards different groups.
Turning to the principle, I applaud the idea behind the campaign; that is why we brought the guidance forward. As the hon. Lady said, many voluntary groups and others live from hand to mouth. Money comes in, and it goes out. They spend what they need to spend to bring children in, to enable them to do activities, or to take them camping, and then it is gone. The church raises enough money to keep the roof onit does not do it for other reasonsand so on. So the principle is absolutely right, and I think that we have met it with the combination of the guidance and what is in the clause.
The Secretary of State and Welsh Ministers will issue guidance to undertakers that will cover the need for concessionary schemes from which community groups should benefit, and set an affordable charge. It will be very much in line with what is in the amendments. Undertakers are required to have regard to the guidance. I have made the Secretary of States draft guidance available, and if anyone has not received a copy, we will send it to them again.
We will expect all companies that move, or have moved, to a site area that charges for surface water drainage to assess whether a concessionary scheme is necessary for community groups, and to ensure that such groups do not face unaffordable charges. I hope that the draft guidance makes that clear.
The draft guidance has not been out for consultation. It has gone only to Committee members, but we would put it out rapidly, subject to the Bill getting Royal Assent, which I hope it will, with the will of the House and the other place. As soon as that happens, we can get the guidance out for consultation.
Paragraph 3.1 on the need for a concessionary scheme states that:
The Government is clear that they do not want to see community groups facing unaffordable increases in their water bills as a result of site area charging for surface water drainage. We expect undertakers to ensure that this is the case and Ofwat will ensure that undertakers have had regard to this guidance in its approval of individual charge schemes.
As I have said, we must not forget that other customers will be subsidising the concessionary schemes for community groups, to a lesser or greater extent, so the profile of each companys customer base will differ markedly. I have seen some of the differences, and they are quite stark.
The guidance will also make it clear that we expect companies to undertake impact assessments and consultation, not only with community groups but with their wider customer base and the Consumer Council for Water, before implementation of concessionary schemes. Our approach will give companies the flexibility to reflect local circumstancesthat is right and properand local needs, and it will ensure that schemes are fair for all customers.
I am happy to reveal some of the elements in the draft guidance, and I know that Members will look at it as well. Paragraph 4.2 of the draft guidance states that, as a minimum, we would expect to see the groups that the hon. Member for Vale of York has identified in amendment 40 included in concessionary schemes. However, we do not want to include those groups in the Bill because it would mean that any changes necessary in the future could be made only by revising primary legislation.
In addition, if we specified eligible groups in the Bill, it would have to be absolutely clear in legal terms who the members of each class were, and that is not simple. We have been through this beforethe issue of trying to identify specific community groupsin previous legislation. It can be done, but it is notoriously difficult. Any legal ambiguity would lead to poor legislation and would risk the clause becoming the subject of litigation to establish the scope of the classes.
I accept that the hon. Ladys amendment refers to community groups that should be included in a concessionary scheme as a minimum, but there is a real risk that specifying any community groups in the Bill will open the floodgates for further amendments to include additional cases from additional groups in the primary legislationbelieve me, I have been through this already. Let us deal with that in secondary legislation and in the guidance, and let us get the guidance absolutely clear.
Concessionary schemes could include charities, but are we then talking about charities headquarters, or their shops, which compete with retailers on the high street? It could include schools, but are we then talking about private schools, public schools or every school? It could include hospitals, and so on. For all those reasons, I am firmly of the view that we do not want to specify the groups in the Bill. We need to work together on the guidance, and get that absolutely right.

Martin Horwood: The Minister may be making a bit of a meal of this. Having worked in a number of charity headquarters and visited many charity shops, I do not think that many of them would have much of a problem with area-based charging.

Huw Irranca-Davies: Let us get it right in the guidance, because we have the future-proofing and flexibility there to do so.
The hon. Member for Vale of York mentioned schools and hospitals. We acknowledge that one scheme currently in place includes local schools and hospitals to some extent. We have said in the guidance that schools and hospitals should not be included in perpetuity. They are big organisations and involve big surface water areas, but if we were to move, particularly where a scheme might include them already, there would be a transition from where we are now to where we need to go. To pick up on the point that the hon. Lady made, we are trying to incentivise a change to using well-managed surface water otherwise, rather than putting it straight down the plughole and into the drains. However, we must do that over time, and the guidance, again, explains how that might work.
On affordable charges, Severn Trent, in the constituency of my hon. Friend the Member for Stroud, runs a concessionary scheme that has come in for plaudits. It has worked well. Under the scheme, organisations that benefit from the concession tend to pay about £100. It varies slightly, but that is the average.
However, as I said, I do not want to stipulate a charge in the Bill or elsewhere, because it will change over time. We need to set the criteria, and then companies need to go out and talk to people about what they are going to implement so they can decide which band to place organisations in, based on impact assessments and consultations. As I said, I have issued draft guidance to the Committee, and Ministers in Wales will issue guidance as appropriate.
Turning briefly to amendment 162, I assure my hon. Friend that the Governments guidance will include a section on an affordable charge.

Roberta Blackman-Woods: I do not know whether this is the appropriate place to mention this, but what is the Ministers thinking on the other social tariffs that might be available to protect vulnerable families and individuals, as my hon. Friend the Member for Llanelli mentioned?

Huw Irranca-Davies: I do not want to pre-empt the discussion that we might have during debate on a subsequent amendment, time allowing, but I note the fact that four hon. Members have now raised that point and the wider issue of social tariffs and affordability for individuals and home owners as well as community groups. I hope that we get to debate that amendment, because I hear what hon. Members have said and have been lobbied a fair bit on the issue of social tariffs as well as on Scouts, voluntary groups and community associations. I note the comments that have been made.

Anne McIntosh: I could not find the consultation on the guidance among my papers, but I am delighted that my hon. Friend the Member for Norwich, North found it on the desk. The Minister may take it as read that we will consider it carefully in preparation. It is generous and timely of him to share it.
I thank the Committee for having such a full debate on the issues. I thank the hon. Members for Llanelli and for City of Durham for their contributions and the hon. Member for Stroud for his very full amendment. The amendments were intended to be probing amendments. I am glad of the debate; the amendments raised several issues, and I thank the Minister for his full reply. I will withdraw them at this stage, but we will obviously return to them on Report. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 42 ordered to stand part of the Bill.

Clauses 43 to 45 ordered to stand part of the Bill.

Clause 46

Technical provision

Anne McIntosh: I beg to move amendment 41, in clause 46, page 29, line 18, at end insert
(a) Section 42 comes into effect not later than three months after Royal Assent..

Ann Winterton: With this it will be convenient to discuss Government amendment 164.

Anne McIntosh: I am pleased that we are making such good progress. Our amendment is fairly straightforward. Its specific purpose is to require the Government to implement the provisions covering surface water charging within three months of the Bill becoming law. Following last summers flooding, we have made progress and it is timely to introduce those provisions. That was a new form of flooding, and surface water charging is pertinent.
Water companies have already planned their charging schemes for next year in the expectation that surface water charging will not be in place, but if implementation is delayed beyond the summer, companies ability to plan the following years charging schemes will be impeded. We would welcome certainty from the Minister about when the changes will take place, and that would be welcome to the companies concerned.
The amendment would also have an impact on customers, who have already had a long wait for a solution. The Government could have acted before last summer, but chose to wait for the Bill. I am sure that customers would also welcome clarity about when they may expect their bills to be reduced.
That is the purport of amendment 41, and I have great pleasure in inviting the Committee to support it in the spirit in which it was moved.

Huw Irranca-Davies: I appreciate the spirit in which amendment 41 was moved. It would automatically bring clause 42 into effect if the Secretary of State or Welsh Ministers do not commence the new provision within three months of Royal Assent. I recognise the need for early commencement of clause 42, but it would still be too late to use it to introduce concessions for the next charging year of 2010-11 even if Royal Assent were obtained within the next month.
The charging year for water bills is from April to March, and bills for unmeasured customers are sent out even before that. That follows the granting of Ofwat approval of charging schemes that require companies to prepare them by September each year and on which there is consultation with the Consumer Council for Water. Final approval of charging schemes is usually obtained in February, before the bills are sent out.
The amendment would not cause a problem in Wales, although one of the four English water and sewerage companies, Severn Trent Water, supplies many customers in Wales. It would also not cause a problem for companies that do not intend to move to site area charging. However, the four companies that already charge in that way would either have to work out a hasty timetable with Ofwat to introduce new schemes by April 2010, or carry out an expensive bill-adjustment exercise to meet the timetable proposed in the amendment.
We intend to consult on the draft guidance that has gone out to the Committee when the Bill has completed its parliamentary stages, and to commence the relevant part of the provision in plenty of time for water companies that want to move to area-based charges and/or introduce concessionary schemes for the 2011-12 financial year to develop their schemes. Given that clarification of why it is nigh on impossible to achieve the objective in the amendment, I hope that the hon. Lady will withdraw it.
Government amendment 164 is a technical amendment to ensure that the power to commence provisions in the Bill is consistent with devolution arrangements. The general position is that the Secretary of State has power to commence provisions in relation to England, and Welsh Ministers in relation to Wales. This is provided for in clause 46(3)(b) and (c). Exceptions are set out in clause 46(3)(a), (d) and (e). This amendment sets out further exceptions to that general position, which have been agreed with the Welsh Assembly Government and were deemed necessary properly to reflect the basis on which the clause, to which the commencement provision relates, is devolved. So it is a technical issue.

Anne McIntosh: I thank the Minister for his clarification. It was an important point and we welcome the opportunity to debate it. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendment made: 164, in clause 46, page 29, line 19, leave out paragraph (a) and insert
(a) sections 22(1)(a), 28, 29, 34 (and Schedule 5), 40, 43 and paragraph 42 of Schedule 4 come into force in accordance with provision made by order of the Secretary of State,
(aa) section 22(1)(b) and (2) and sections 23 to 26, so far as they relate to English Committees, come into force in accordance with provision made by order of the Secretary of State,
(ab) section 22(1)(b) and (2) and sections 23 to 26, so far as they relate to Welsh Committees, come into force in accordance with provision made by order of the Welsh Ministers,
(ac) sections 35, 36, 41 and 42, so far as they relate to water or sewerage undertakers whose areas are wholly or mainly in England, come into force in accordance with provision made by order of the Secretary of State,
(ad) sections 35, 36, 41 and 42, so far as they relate to water or sewerage undertakers whose areas are wholly or mainly in Wales, come into force in accordance with provision made by order of the Welsh Ministers,
(ae) section 37, so far as it relates to orders made by a Minister of the Crown under Part 3 of the Regulatory Enforcement and Sanctions Act 2008, comes into force in accordance with provision made by order of the Secretary of State,
(af) section 37, so far as it relates to orders made by the Welsh Ministers under Part 3 of the Regulatory Enforcement and Sanctions Act 2008, comes into force in accordance with provision made by order of the Welsh Ministers,.(Huw Irranca-Davies.)

Clause 46, as amended, ordered to stand part of the Bill.

New Clause 28

Building regulations: flood resistance
(1) After paragraph 8(5) of Schedule 1 to the Building Act 1984 (building regulations: application to buildings erected before the regulations come into force) insert
(5A) The provision that may be made by building regulations includes provision imposing on a person carrying out work of any type in relation to a building (whenever erected), or in relation to any service, fitting or equipment provided in or in connection with a building (whenever erected), a requirement to do things for the purpose mentioned in section 1(1)(a) of this Act in so far as it relates to the resistance or resilience of buildings in respect of flooding.
(2) In paragraph 8(6) of that Schedule after sub-paragraph (5) insert or (5A).(Huw Irranca-Davies.)

Brought up, read the First and Second time, and added to the Bill.

New Clause 29

Water and sewerage charges: non-owner occupiers
(1) After section 144B of the Water Industry Act 1991 (charges: charging by volume) insert
144C Non-owner occupiers
(1) This section applies to residential premises which are occupied by one or more persons other than the owner (and not by the owner).
(2) The owner must arrange for the undertaker to be given information about the occupiers.
(3) If the owner fails to comply with subsection (2), the occupiers liability for charges under this Chapter becomes shared jointly and severally with the owner.
(4) The Minister may make regulations
(a) about the information to be given under subsection (2);
(b) about timing and procedure in connection with subsection (2) or (3).
(5) The Minister may make regulations exempting owners from liability under subsection (3) where
(a) information supplied by them is false or incomplete, but
(b) they have taken steps specified by the regulations to ensure its accuracy or completeness.
(6) Residential premises means premises that are
(a) occupied by one or more persons as a home (but not necessarily as their only or main home), and
(b) a dwelling, a house in multiple occupation or accommodation for the elderly within the meaning of paragraphs 1 to 3 of Schedule 4A.
(7) Where a person is the owner of premises by virtue of being agent or trustee (see section 219(1)) the duty and liability under this section attach to the principal (and not to the agent or trustee).
(8) The Minister means
(a) the Secretary of State, in relation to services provided by an undertaker whose area is wholly or mainly in England, and
(b) the Welsh Ministers, in relation to services provided by an undertaker whose area is wholly or mainly in Wales (for which purpose section 213 applies with references to the Secretary of State and either House of Parliament being taken as references to the Welsh Ministers and the National Assembly for Wales).
(2) Transitional provision of an order commencing this section may, in particular, provide for application of the duty in new section 144C(2) to depend on service of a notice by an undertaker..(Huw Irranca-Davies.)

Brought up, and read the First time.

Ann Winterton: With this it will be convenient to discuss the following:
New clause 1Social tariff amendment
The Secretary of State must by regulations make one or more schemes for the purpose of reducing water poverty..

This introduces an obligation for the minister to bring forward regulations to introduce a social tariff.
New clause 2Environment tariff - resources and profit
(1) The Secretary of State must within one year of the passing of this Act bring forward regulations concerning the relationship between the use of water resources and increased revenue.
(2) Such regulations must consider removing the link between increased use of a water resource and increased revenue to water companies.
(3) The regulations must include the creation of a water environment fund to be spent on environmental measures, which may include flood alleviation.
(4) For this section, increased revenue is defined as the extra money paid to water companies by consumers above a capped level based on historic household usage for the increased use of a water resource.
(5) Increased charges resulting from increased use of a water resource shall be given to the water environment fund as in section 3 and not as increased revenue to the water company..

This is to de-link profit and increased resource use. It requires the Secretary of State to set up a fund to pay for flood prevention measures out of extra profits the water companies receive.
New clause 3Ofwat having regard to environmental measures
(1) The Water Industry Act 1991 (as amended by the Water Act 2003) is amended as follows.
(2) After section 39(4)(e) insert
(f) sustainable development is defined as, but not limited to, furthering the interests of existing and future consumers regarding
(i) their interests in the reduction of water-supply emissions of targeted greenhouse gases;
(ii) their interests in the security of supply of water to them;
(iii) their interests in the broader water environment, including but not limited to, biodiversity and flood alleviation.
(g) in this section
(i) emissions has the same meaning as in the Climate Change Act 2008;
(ii) water-supply emissions in relation to emissions of a targeted greenhouse gas means any such emissions (wherever their source) that are wholly or partly attributable to, or to commercial activities connected with, the shipping, transportation or supply of water conveyed through pipes;
(iii) targeted greenhouse gases has the same meaning as in Part 1 of the Climate Change Act 2008..

This amends the Water Industry Act 1991 to give Ofwat a remit that includes having regard to greenhouse gas emissions and security of supply.

Motion made, and Question proposed, That the clause be read a Second time.

Martin Horwood: I certainly welcome new clause 29, about which I hope we will hear a little more. Bad debt is an issue that definitely needs to be tackled, but this new clause is another example of welcome flexibility from the Government, in that they extracted a recommendation from the Walker report and placed it in the Bill in quite short order.
New clauses 1, 2 and 3 all relate to the responsibilities of Ofwat. It looks as if we will have enough time to address them but if that is not the case I would certainly want to return to them on Report. Ofwat was created in the era of rampant privatisation. As with other regulators that were established at the time, it was supposed to offer some protection to the interests of consumers from the jungle of capitalism red in tooth and claw. As was rather typical of those days, the interests conceived were imagined to be purely economic, and issues such as fairness, environmental responsibility and sustainability were not really on the agenda. Uniquely among regulators, Ofwat seems to have preserved those rather impoverished values in aspic. Ofcom and Ofgem, among others, seem to have managed within their regimes to incorporate social tariffs and other forms of socially responsible tariff. In the case of Ofgem, there is such a plethora of social tariffs in the energy industry that we have colleagues in another Committee Room trying to rationalise the scheme.
Ofwat has argued that because of its remit, it cannot do the same thing. As became clear in our evidence sessions immediately before we began full consideration of the Bill in Committee, there is now growing consensus that the matter needs legislation to sort it out. Further legislation may be some time coming, and I understand that the Ministers ideal is that the whole of the Walker report be properly consulted on and that legislation be then introduced. However, one water management Bill has taken some years to introduce and we may have to wait some time for another, so the time to act is now.
On social tariffs in new clause 1, the need is particularly clear. The Consumer Council for Water points out that water and sewerage bills have risen faster than inflation for the past four years running. In 2008-09, they increased by about 6 per cent. Overall, since privatisation water bills are some 44 per cent. higher in real terms. It is expected that this year, 12 per cent. of customers will face water and sewerage bills that are more than 3 per cent. of their disposable income. In the south-west, where there is an unfortunate combination of relatively low incomes and very high water bills, some 30 per cent. of customers could well be in that position. Only some 24,000 customers nationwide are on the rather limited WaterSure scheme, and the Ministers Department estimates that as many as 300,000 households should really be eligible for it. Clearly, the scheme is not working to full effect.
The Consumer Council for Water has worked to rebrand the scheme and has introduced a standard simplified application form, which substantially boosted uptake of the scheme in 2007-08, but it is still a small fraction of the people in need.
The Walker report is equally clear in its analysis of the problem and its conclusions. Paragraph 11.2.2 states:
Evidence received showed that there are customers in all company areas who find it difficult to pay their water charges. The review team also received evidence showing that affordability issues are particularly acute where overall income levels are low and where average water bills are high.
The review paid particular attention to the interaction between the issues of affordability and the introduction of water metering. Paragraph 11.2.4 states:
Research has shown that where 90 per cent. of households are metered, affordability is likely to worsen for low income single parents and low income households with three or more children. Both now and during the transition to metering, low income households with children are therefore a further group that might need help with affordability.
The report has identified a number of different groups: customers with low incomes and high essential water use; customers with low incomes living in a high-cost area; customers with low income and children; andrather broadlycustomers with a low income generally.
Paragraph 11.5.2 concluded:
The review team considers that there are certain adjustments that should be made to the system now
I emphasise that point
aimed at helping customers who are struggling to pay their current water bills. These changes should continue into the future anticipating much higher levels of metering.
The review team concluded that the rateable value system of cross-subsidy for low-income customers is poorly targeted and is unwinding as metering develops, and that a package of affordability measures is needed for those on low incomes.
There were various proposals in the Walker report and there are different perspectives on them. Clearly, some consultation is required, but what is needed urgently in the Bill is something that permits that. The situation for water companies is quite ridiculous: a number have had to try to find ways of reinventing social tariff proposals in order to get them past Ofwat.
Some of the companies are taking a very responsible attitude. I shall quote the example of Thames Water, which contacted me recently. It stated that
by 2015 seven per cent of Thames Water customers, around 360,000 households, would be paying more than three percent of disposable income, with 140,000 of these paying more than five percent of disposable income.
The social tariff proposal that Thames Water made in its business plan focused on customers with the greatest affordability impact. We proposed a two tier tariff giving a 50% discount to the one percent of households paying the biggest proportion of income, and a 25% discount to the next four percent of households paying the next highest proportion of income. We tested our proposals through deliberative and quantitative customer research and found that Thames Water customers were supportive of the need for a social tariff and were willing to pay for this, as long as the cost remained relatively low. Our proposals were costed at less than £1 a year in terms of a cross-subsidy from all other customers to those receiving the discounted bills and were supported by customers at this level.
Our modelling showed that our proposed tariff was particularly effective in reducing the number of customers paying more than 5% of disposable income.
That number would drop from nearly 3 per cent. of their customers to less than 0.5 per cent. by 2014-15, so it would have a significant impact. The Bill needs to be amended now to make that clear, as Water UK clearly argued in the evidence session. I commend the new clause to the Committee.
I have been encouraged in the past few weeks by some of the Ministers remarks about his being open to the idea of social tariffs being included in the Bill. I made a few jibes about Thatcherite conservatism in my opening remarks, but I know that the Conservative party has now entered a more liberal and progressive phase, and the right hon. Member for Witney (Mr. Cameron) has now declared that there is such a thing as society, so I am sure that I can count on Conservative support for what is certainly a progressive and liberal amendment.
New clause 2 deals with a slightly different matter. It would explicitly permit another departure from Ofwats purely market-driven framework. The objective is simple: to de-link water use from profit, shifting us from a world of complex water efficiency goals, which are difficult to implement and monitor in practice, to one in which increasing water usage will simply cost companies money and damage shareholder value, thereby unleashing the genius of British business to drive water efficiency forward. It is the same philosophy as that seen in carbon markets. The market framework will be set in such a way that water companies will want to do that as a matter of their core business. That is the best way to proceed, rather than the Government trying to invent ways to make those environmental improvements.
The method I propose in the new clause is simple. Every household will be given time to establish an historical level of usage, which will of course reflect considerations such as the number of children or any medical conditions. If usage decreases, the situation is straightforward, as the households bills will decrease and, indeed, the profit of the water company might decrease a little, depending on the exact nature of the tariff. The interesting aspect of the new clause is that it prescribes that where usage increases, the customers bills will increase, but the profit taken by the water companies will remain static, at the historical level of usage. The surplus generated will then be earmarked for additional environmental measures.
The software required to make that sort of amendment to billing would be relatively easy to set up. It is a simple idea, and equally applicable to the energy sector. I have discussed it with both water and energy companies and have yet to meet one that objects to it. It is a simple and straightforward idea that would release market pressures to drive water efficiency. I commend it to the Committee.
New clause 3 is the simplest and most obvious of the three. Ofwat is still driven by the vision of people as customers, with no real regard to their wider interests as human beings within a wider natural environment. That has led to some strange concepts in the past. Although it has now retreated from using the term, which has fallen into disuse, for a long time they talked about the economic level of leakage, as if there were no reason to reduce the enormous levels of leakage in some water company areas except reasons of profit and the sustainability of the business, and as if there were no reason to work to reduce leakage at an absolute level. Given the critical challenges of climate change and the need for security of water supply as climate change progresses and we have to adapt to it, it is critical that Ofwats rather 20th century neocon remit is now fundamentally changed to take account of the new world in which we live.
New clause 3(2)(iii) specifically mentions the other important environmental issues of biodiversity and flood risk, which neatly connects the new clause to the rest of the Bill. After all our discussions over the past weeks, the inclusion of that alone would justify the amendment.
I commend all three new clauses to the Committee.

David Drew: I support the hon. Gentlemans principles from a number of perspectives. First, it would be strange if, having spent some time considering how we can deal with social tariffs for communities, we ignored individuals. My starting point is that we have to identify that as a problem.
Secondly, I have always worried about those who face water bills and about how to disaggregate those who cannot pay and those who will not pay. It is a fairly open secret that there are people who use the Governments policy, which is right, to persuade water companies to use every means possible to avoid withdrawing water supplies from a individual household. Sadly, however, there are some individuals who abuse that and blatantly refuse to pay their water bills. We need to look at a different way of assessing that. The social tariff for individuals is a sensible way to go forward.
ThirdlyI shall be careful how I say thison the prompting of my hon. Friend the Member for Carlisle (Mr. Martlew), who has chaired some of these proceedings, we should look at what happens where those on water meters are subject to a flooding incident. There has been correspondence on that matter between my hon. Friend and the Secretary of State. There is a need to recognise that, as more people go on to water meters, if there is an incident that could result in people with water meters having to pay substantially more because of the way in which those meters are affected by problems of floodinglike anything elsewe must ensure that they are not penalised in any way. I should be grateful if my hon. Friend mentioned something about that.
As a fundamental principle, we must have a social tariff and a way to charge people who find it difficult to pay their water bills appropriately, with cross-subsidisation. Let us be honest about this. We have heard about the figure of less than £1. That is the killer fact. We are not talking about major redistribution between customers, but about those of us who can afford to pay helping those who cannot. Let us crack down on those who will not pay for reasons that we all know about. When they talk to us, all water companies say that that has to be dealt with.

Nia Griffith: The timing is critical, because we were keen for the Bill to go through as soon as possible and we did not want to delay it for any reason. Those of us who followed the progress of the Walker report know that this is a complex subject into which considerable work has gone. We know about genuine cases where there seems to be a considerable mismatch between household income and the charges that are being faced, but we find that there are no ways round that, as there are with other things, such as by using housing benefit or some of the existing fuel poverty schemes. We have seen it with our own eyes.
It seems fortuitous that we now have the publication of that report and we are in a position to take the recommendations and make something of them within the context of the Bill. I would be sorry to see that opportunity missed, and I hope that the Minister will, even at this late stage, find some way to include a social tariff to help those with the greatest need. As hon. Members have mentioned, the charges to the rest of us resulting from such a scheme would be minimal, if it was sensibly prepared and targeted at the households that need help. I therefore urge my hon. Friend to look carefully at how we can do that, while at the same time not closing the door to any improved ways of doing it that we may come to in the future.
There is a lot of work to be done on the Walker report in looking carefully at how measures might work in practice. An area of great concern for people in the south-west and in Wales is that there is a disproportionate amount of coastline compared with the number of subscribers. Therefore, as European directives for cleaner and cleaner waters arrive, we will be faced with more and more work to do.
There is a much wider debate to be had about whether there is any rationale for not leaving areas to look after themselves, and instead having a national infrastructure involving cross-payment between areas to cope with the fact that we have concentrations of population in some areas and a sparse population with large responsibilities for coastline in other areas. That is a wider debate and I do not want us to close the door on future discussions about charging. However, I feel that the social tariff idea should be included now that we have the Walker report.

Anne McIntosh: We are straying into challenging areas, on which there are various views. The Select Committee considered them in a cursory way, and it is fair to say that they were in the draft Bill in some shape or form. We took the decision over the summer and autumn that we needed a Bill this side of a general election that would implement the Pitt recommendations. Time has marched on since the summer floods of 2007, and we have had the Cumbrian floods of autumn 2009. We believe that there are issues of concern about bad debt, water affordability, water poverty, the concept of a social tariff and all the issues in the Cave and Walker reviews.
I like to think that the Conservative record on this matter is positive. The Conservatives came forward in the late 80s with a White Paper and proceeded to pass the Water Act 1989 that set the regime for the water industry over the past 20 years. The time is now right for those issues to receive further examination, as we stated in the autumn around the time of the party conferences.
It is incumbent on all parties to go away and discuss the contents of the Cave review, the Walker review and the Environment Agencys publications from last year, and take stock. Tempting as it is to have a full discussion and debate on social tariffs, environmental tariffs, the role of Ofwat and others, we are minded to support new clause 29. It seems a nonsense and unacceptable that tenants, or as the Government call them, non-owner occupiersI do not know why we cannot call them tenants, perhaps that has a specific legal meaningare able to walk away without paying their water rates. The bad debt runs into millions every year and probably now costs the water companies more than leakages. We would therefore like the Committee to consider new clause 29.
We have had discussions with Anna Walker, and believe that some detailed work needs to be done on competition, metering and the other aspects. Affordability is a particular concern to all customers, as the hon. Member for Llanelli has said. There is the acute problem of how we charge for implementing the EU directive, especially in an area such as the south-west of England. Wales may be in a similar position, but I think that the situation in the south-west is generally agreed to be particularly difficult. I think that there is an Adjournment debate on that issue on the Order Paper, to which I am sure the Minister will find himself replying when many others have had the opportunity to contribute.
We have to grapple with some real issues, and we have concerns about tariffs being fair, and about poverty, water efficiency, water stresswhich we have not begun to discussand the concept of paying for water in an affordable and fair way. Rightly though, the two main parties seem to agree that the debate has to take place in the context of a wider Bill. There are controversial debates to be had, and it would generally be welcome if the Minister took some of the ideas away and worked on them, and perhaps discussed them further with both the industry and other parties.

Martin Horwood: May I clarify whether if I chose, or felt it necessary, to press new clause 1 to a vote, I would have Conservative support?

Anne McIntosh: The issues are worthy of further debate, but we are not inclined to support the hon. Gentlemans new clauses at this stage.

Huw Irranca-Davies: I hope that with this group of new clauses we can make some progress. I have heard what has been said, and many Members have spoken about social tariffs, but first let me explain new clause 29. Curiously, in the light of the broader discussion that we have just had and of our previous discussion on the need to protect community groups and associations, new clause 29 is here for a similar reason, because we anticipate that there will be a broad consensus, both out there among stakeholders and among us, that we need to have the provision in the Bill. Rather than cherry-picking, these are things that are not only essential but that we can do. They will not delay the primary purpose of the Bill to implement Pitts recommendations. I give that as a backdrop to my comments for the moment.
New clause 29 seeks to tackle the problem of bad debt in the water industry. That is a real problem, which has been picked up by many commentators. The new clause was tabled following concerns raised on Second Reading, and following the publication of Anna Walkers excellent final report on charging for household water and sewerage services.
Since privatisation of the water industry, water and sewerage bills have increased significantly above the rate of inflation, by about 40 per cent. in real terms, but on the flip side they have also funded £85 billion of investment in the sector. That has led, however, to an increasing number of customers falling into arrears or struggling to pay their water bills. I can see a bit of an argument developing about that. At the same time, we have seen a disproportionate increase in bad debt in the water industry, three times that in the energy sector, despite average water bills costing only a third of average energy bills, at a cost of £12 per year to other bill-paying customers. In addition, since the ban on disconnection in 2000which was quite rightcompanies have started to be required to supply domestic properties with water, and therefore residents do not need to supply companies with contact details to secure a water supply.
Under current legislation, occupiers of properties are liable for water bills, but companies must rely upon them for the information needed for billing. Without customers details, water companies are unable to pursue residents of a property for payment, or to pursue them for payments once they havepardon my Frenchbuggered off. The water industry estimates that leaver debt accounts for approximately 44 per cent. of that debt. [Interruption.] I am not sure that was French, but my Dad told me that it was, Lady Winterton.
New clause 29 would require owners of residential rental properties to arrange for the provision to water and sewerage companies of prescribed details of the occupier of a property. Under the legislation, the occupier of a property remains the person liable for payment of water bills unless details of the occupier are not provided to the water and sewerage company within a set time scale, which will be set out in legislation. It has been a welcome amendment, which was worked on in consultation with the water industry, consumer organisations and others. It helps to fix the problem of bad debt.
New clauses 1, 2 and 3 were tabled by the hon. Member for Cheltenham and there has been much debate about them. They relate to the water industry paying for water and to economic regulation. Those issues have been considered in Anna Walkers independent review and we have already made it clear that we are fully committedthe hon. Member for Vale of York has said that is the Conservative position as wellto consult on the recommendations and carefully consider them before introducing proposals on them.
New clause 1 would require Ministers to bring forward regulations to introduce one or more social tariffs to assist customers who were in water poverty. Its intended effect is to reduce the bills of customers who spend more than a particular percentage of their income on water and sewerage. I assure the Committee that we take the issue of water affordability seriously, which is why we set up the Walker review to take it out of Government and look at it properly. Section 143A of the Water Industry Act empowers Ministers to make regulations to assist water customers with their bills. Assistance can be provided according to, inter alia, age, ill health or disability, or in relation to financial circumstances.
We have made use of that power through the Water Industry (Charges) (Vulnerable Groups) Regulations 1999, which cap water and sewerage bills for households that are metered and receiving a means-tested benefit, and where there is either someone with a prescribed medical condition that causes a huge increase in the use of water, or three or more dependent children under the age of 19. Many members of the Committee will know of schemes such as the WaterSure tariff, which provides tangible assistance to vulnerable, low-income metered households and avoids any risk that they might cut back on their essential use of water. That does not, however, extend to all low-income households.
Anna Walker looked at whether water spend as a percentage of income should be used as a trigger for assistance. In paragraph 8.1.4 of her interim report, she concluded that
while water spend expressed as a percentage of income might be a useful indicator of the relationship between customer bills and incomes over time, it is not suitable to be used as a trigger for assistance.
The reasons given were that any percentage figure would be set at an arbitrary level, unrelated to actual water consumption or need, and would not facilitate targeted help.
Anna Walkers final report contained proposals for a new, more closely and effectively targeted package of support for some low-income customers. They included the possibility of offering all metered customers of certain means-tested benefits a 20 per cent. discount on their bills, or a concessionary scheme for low-income households with one or more children.
My consistent view, which the hon. Member for Cheltenham and I have debated on his previous amendments, has been that we need to consult on Anna Walkers recommendations as a whole before taking decisions on whether a social tariff is needed, or whether the vulnerable groups tariff needs to be revised. That point was made by the CCW and Water UK during the evidence sittings. Philip Mills of Water UK said:
It could be argued that introducing social tariffs at this moment may be premature, because it could pre-empt the recommendations, or any legislation that would enact the recommendations, from the recent Walker review.[Official Report, Flood and Water Management Public Bill Committee, 7 January 2010; c. 58, Q86.]
Tony Smith of CCWater said:
As the Anna Walker review pointed out, there is a range of possibilities
to which my hon. Friend the Member for Llanelli alluded
to address the problem. The crucial issues are what the right set of recommendations are and who should pay, because customers are concerned about potentially cross-subsidising other customers.[Official Report, Flood and Water Management Public Bill Committee, 2010; c. 60, Q93.]
However, I think that I have shown the Committee that I will listen to arguments, particularly if they seem to have support across the Chamber.
I am minded to give further consideration to social tariffs, but I need to clarify something. Amending the Bill along the lines suggested will not be easy for all the complex reasons in Annas report. In the short time available, we will need to work through some fairly complex issues pretty rapidly, such as exactly what we think is needed and how the provisions will work in practice.

Anne McIntosh: I support the Ministers line of thinking. Any of us could have tabled amendments, but we made a policy decision not to. I fear that this is a pick and mix approach and there is also a danger of that with new clause 29. We should proceed with the Bill as it is and continue to work and consult to form a view on other, more far-reaching aspects.

Huw Irranca-Davies: I am coming on to my proposal, but that is a helpful intervention and I agree.
I began my comments by saying that we know that we have broad agreement on new clause 29 and the concessionary schemes for voluntary groups, churches and others. We have talked through those proposals in detail and can see that, even if it pulls in particular things are not to do with risk management, it is critical that we take this opportunity.
Let me outline my proposal for social tariffs. I do not want to derail the Bill. I say honestly to the hon. Member for Cheltenham that, if we were to take this forward, we would need to ensure that it would not bog us down in endless amendments or lead to our facing accusations here or in another place of cherry-picking. Other hon. Members or their lordships could also choose to cherry-pick Anna Walkers review and we would lose the Bill. I am willing to go away and look at social tariffs, but only on condition that we rapidly put our heads together on the back of the Committee and see if we have the good, effective cross-party support that would allow us work through the issues.

Angela Watkinson: In the Ministers earlier remarks, he said that the occupier of a property, who is not the owner, is responsible for meeting water charges. How is a tenant placed if they have a rental contract, which they believe includes water charges, and it transpires that the owner of the property who does not live there has not met the charges? To whom would the debt attach?

Huw Irranca-Davies: Would the hon. Lady mind if I returned to that point in a moment? I want to elaborate further on a way forward on principle on the other new clauses. She has raised a good point and I will come back to it.
I have heard from my hon. Friend the Member for Llanelli and the hon. Member for Cheltenham, and I think that the hon. Member for Upminster is also sympathetic. If we can establish a consensus on the back of our debate, there may be something that we can do, but I am determined that we do not either include something wrong in theBill or mess it up by others throwing in other cherry-picked parts of the Walker review or the Cave review on competition and innovation.
I will also need to discuss the matter with my colleague, Jane Davidson, in the Welsh Assembly Governmentthey are key to the proposal. It is worth pointing out that I have not discussed this at all with her. That does not apply to new clause 29 on payment liability for water bills, which was highlighted as a priority in the Walker review. I suggest that I carefully consider whether a provision to enable water companies to operate social tariffs should or could be included in the Bill in the time scale to which we are working. I shall return to that on Report, because I do not want to derail the Bill, but I do so with that proviso and on the basis of our understanding as a Committee, and as Front Benchers in Committee, first, that we want to get the issue right and, secondly, that it will not lead to additional debate here or in another place.
On regulation, Ofwats current duties already require it to contribute to sustainable development, to ensure that water companies are able to finance their functions associated with security of supply and to consider the interests of future as well as current customers. The sustainable development duty includes climate change, and Ofwat already has a dedicated team that leads on that. I am therefore clear that Ofwats current duties enable it to act on climate change issues. That conclusion was also reached by Anna Walker in her review.
DEFRA and the Welsh Assembly Government also issue statutory social and environmental guidance to Ofwat, which Ofwat is required to have regard to when carrying out its functions. The guidance was issued by DEFRA in December 2008 and by the WAG in February 2009; it included guidance on climate change mitigation and adaptation, which Ofwat had regard to during its 2009 review of water price limits.
Including a specific reference to climate change in primary legislation would have the effect of distorting the weight that Ofwat currently gives to the environmental, economic and social aspects of sustainable development. I believe that it is in the interests of Ofwat to follow a balanced approach to sustainable development as it fulfils its role as economic regulator. That said, the hon. Member for Cheltenham raised a valid point about what the role and responsibilities of Ofwat should be and whether they need to be revised.
When the water industry was privatised, the role of the economic regulator was, in essence, to ensure that companies fulfilled their functions and to extract efficiencies. However, social and environmental issues such as water affordability and climate change have become much more of an issue in the 20 years since. Ofwat is going to undertake an evaluation of its 2009 review of water price limits this year, and is beginning work on its approach to price setting in future, which will include having regard to the Governments social and environmental guidance in its ongoing regulatory activity.
A fundamental review of Ofwats role was recommended by the EFRA Committee in its 2009 inquiry into PR09. My view is that a review of Ofwat in some form would indeed be justified, because time has gone by. I shall consider how best to take that forward, but it will need to look not just at climate change but at social, environmental and economic situations across the board.
We have given a commitment to consider a review of Ofwat and to address the issues raised by the hon. Member for Cheltenham, as well as wider ones. Furthermore, we have given a commitment, with the provisos that I mentioned, to consult on Anna Walkers recommendations and to see whether we can bring something forward that would be fit for purpose and would not constrain us. I hope, therefore, that the hon. Gentleman will consider withdrawing his amendment. I look forward to moving my own amendment formally.

Martin Horwood: That was one of the most positive responses by a Minister that I remember hearing in Committee. I share his urgent desire to see the Bill on the statute book before a general election and not to derail the timetable. Given the generosity and considerable work involved in his commitment, it is only reasonable for us to respond in the spirit in which he has made the proposal. Knowing the noble Lord Greaves, I cannot entirely bind my noble Friendsespecially that onebut, on behalf of myself and my colleagues in this place, I certainly commit. I also commit to urge my noble Friends in another place not to unpick or overly complicate any proposal that should come forward. [Interruption.]

Ann Winterton: We have a suspension for a Division, for 15 minutes if there is one vote, and 25 minutes if there happen to be two votes.

Anne McIntosh: On a point of order, Lady Winterton, there are six new clauses remaining after we finish the group and a whole host of new clauses, which we have already debated, that we need to vote on. The Committee is in your hands. Would you give us some guidance as to how we shall proceed?

Ann Winterton: My understanding is that I have no other option than to suspend, and the guillotine falls at 5 oclock.

Sitting suspended for a Division in the House.

On resuming

Ann Winterton: It being 5 oclock, or a minute or two thereafter, I must now conclude our business.

Debate interrupted (Programme Order, 7 January).

The Chairman put forthwith the Question already proposed from the Chair (Standing Order No. 83D), That the clause be read a Second time.

Question agreed to.

New clause 29 read a Second time, and added to the Bill.

The Chairman then put forthwith the Questions necessary for the disposal of the business to be concluded at that time (Standing Order No. 83D).

New Clause 7

Definition of high flood risk
(1) The Secretary of State must ensure by regulations that local development frameworks must develop a definition of an area as being high flood risk.
(2) The Secretary of State must consult all interested bodies as the Secretary of State may determine..(Martin Horwood.)

Brought up, and read the First time.

Question put, That the clause be read a Second time.

The Committee divided: Ayes 2, Noes 9.

Question accordingly negatived.

New Clause 8

Definition of high flood risk (No. 2)
(1) The Town and Country Planning Act 1990 is amended as follows.
(2) In section 70, after (b) insert
(c) For all applications within high flood risk areas, the local planning authority may cite high flood risk as grounds for refusal..(Martin Horwood.)

This is to ensure that the Secretary of State sets up regulations to ensure the local development frameworks define certain areas as high flood risk, with amendment to the Town and Country Planning Act to ensure it is applied.

Brought up, and read the First time.

Question put, That the clause be read a Second time.

The Committee divided: Ayes 2, Noes 9.

Question accordingly negatived.

Ordered,
That certain written evidence already reported to the House be appended to the proceedings of the Committee(Huw Irranca-Davies.)

Huw Irranca-Davies: On a point of order, Lady Winterton. I will not detain hon. Members too much longer, but I just want to say that I always enjoy working in Committee. It is where a lot of the detail is done. I have particularly enjoyed our proceedings because we have genuinely improved the Bill, and will improve it further when we bring it back at its subsequent stages. I wish to thank the hon. Members for Vale of York and for Brecon and Radnorshire for their constructive and positive engagement. Even though we have disagreed on some areas, we all want the Bill to succeed and to be in the best shape.
I also want to thank the business managers on both sides of the Committeethe hidden people, including my hon. Friend the Member for Telfordwho make the machinery turn. I want to thank you, Lady Winterton, and your colleagues, Mr. Chope and Mr. Martlew, for your great help in achieving such progress. I really want to thank all members of the Committee who have all contributed to the Bill over the past few days of our deliberations, and who will continue to do so to make sure that it is a prime piece of work. They have shown a lot of passion because of their own circumstances, insights from their constituencies and their expertise. The Bill has been a good example of proceedings[Interruption.] I cannot take interventions on a point of order.
I also thank the people not in the room, but who have been listening to or watching our debates and who have lobbied for the Bill in all its parts. We would not be here if it were not for the pressure that we have had from our constituents throughout the United Kingdom. They will continue to work with us. I wish also to thank briefly members of my team, who are hidden away and who provide me with moments of great inspiration. They do a tremendous amount of hard work. They have also made themselves fully available to other hon. Members throughout the course of the Bill to tease out questions and to answer questions outside our proceedings. I thank the Clerks who have transcribed all my difficult Welsh pronunciations, as I do the Serjeant at Arms and the police who have maintained order among usa disorderly rabble. We very much look forward to the next stage and to seeing further progress. We wish this vital Bill speedy progress through this place and, hopefully, into another place.

Anne McIntosh: Further to that point of order, Lady Winterton. May I thank you, Mr. Chope and Mr. Martlew for presiding over the proceedings in such a positive way? I should like to congratulate the Minister on getting the Bill through in this form, despite our best endeavours and to thank all members of the Committeeespecially my colleagues, who have given me a lot of support, which is much appreciatedfor the good spirit in which the proceedings have been conducted.
I should like to echo the Ministers thanks to the business managers. I think that we were almost short of time, so there is still a lot to debate. I should like to thank the Clerk and his colleagues for all their assistance in ensuring that we kept within time and good order. I should like to thank the Doorkeepers, Hansard and the police. May we especially recognise the work of DEFRA officials in introducing these proposals in very difficult circumstances, given the time pressure that we were under?
I think that this is the first Committee on which my hon. Friend the Member for Norwich, North has served, so I hope that she has enjoyed the proceedings. Like the Minister, I enjoy the cut and thrust of Committee work. It rather saddens me that this will probably be the last Committee on which I serve as the hon. Member for Vale of York, as my much underwater constituency will disappear at the election[Interruption]not entirely underwater, despite acts of God and other such issues. I am very sad to say that Vale of York will disappear at the next election. The fact that we have had so many episodes and experiences with water has given me a certain insight that I might not have had otherwise.
I should also like to echo the Ministers remarks and thank all the outside organisations for the interest that they have shown in our work, and we look forward to the next stage of the proceedings.

Martin Horwood: Further to that point of order, Lady Winterton. I should like to join in thanking all members of the Committee for the positive atmosphere in which proceedings have been conducted. I thank the Minister and the Bill team in particular for their open and collaborative approach and, I am sure, for a lot of hard work behind the scenes. I suppose that we should also thank the Minister for recently expanding the bounds of acceptable parliamentary language to include some choice Anglo-Saxon words.
I should also like to thank the Officials and Officers of the House for keeping us on the straight and narrow. I thank you, Lady Winterton, and certainly Mr. MartlewI am not quite sure whether we should thank Mr. Chope, given that his two Divisions on the Floor of the House interrupted our proceedings somewhat, but it would be generous to thank him for his work in the Committee, too.
I should particularly like to thank my hon. Friend the Member for Brecon and Radnorshire for his support and expertise on all things Welsh and rural in particular. I should certainly like to thank my outstanding office team of Victoria White, Harriet Shone and Tom Jenkins, without whose hard work hon. Members would not have heard nearly so much from me. So I suppose that I should finish by thanking all hon. Members for their patience.

Ann Winterton: As the tail-end Charlie of Chairmen and speaking on behalf of Eric Martlew and my colleague, Christopher Chope, I congratulate the Minister and other members of the Committee on proceeding with great good humour, based on a lot of hard work and good sense, and I am sure that the people of this country would be proud of the fine democratic tradition that they have followed. It is also apposite to thank our Clerk and the Clerks Department for keeping us on the straight and narrow, although we had a bit of a scramble every now and again, the police obviously for keeping everything safe, the Hansard writers and all those who are associated with the work of the Committee. All that remains is for me to say, Order, order.

Bill, as amended, to be reported.

Committee rose.